Suzuki CEO says Tata's cheap-car plan not feasible

TOKYO, April 21, 2006; Reuters reported that the head of Suzuki Motor Corp. said on Friday a plan by Tata Motors Ltd. to launch a $2,000 car in India was not feasible in light of the planned advent of stricter safety and environmental regulations.

Japan's Suzuki Motor, through its majority ownership of national brand Maruti Udyog Ltd., dominates the burgeoning Indian car market through compact cars like the 800cc Alto and Maruti 800, which cost upwards of 200,000 Indian rupees ($4,500).

Tata Motors, India's top bus and truck maker, is looking to launch a car in the next few years that will cost less than 100,000 rupees ($2,200), targeting a potential market between motorcycles and Maruti/Suzuki's low-end cars.

"If you think about the direction that safety and environmental standards are going in India, you can't sell a car for that kind of price," said Osamu Suzuki, the auto maker's outspoken chief executive, who engineered the company's successful foray into India 24 years ago.

Suzuki noted that India had plans to adopt stricter EURO IV emissions regulations from 2010, while safety standards were also tightening for three-wheeled taxis in big cities.

"Unless the (government) made exceptions for certain cars, it's not feasible," Suzuki said, answering reporters' questions after a speech in Tokyo. "In this day and age, such exceptions are highly unlikely."

Suzuki said his company had no plans to follow suit, but added that Tata was a formidable rival that could become "the General Motors of India" over time. GM, the world's biggest auto maker, owns 3 percent of Suzuki Motor.

While no-frills, compact cars remain popular in India, the market is shifting up to bigger models as income levels rise and more foreign car makers join the fray.