Maruti Suzuki to launch A-Star in October, ramp up R&D capabilities despite dip in sales

Besides, in times of high inflation, the demand for small, light-weight, fuel efficient cars would grow and strengthen, Bhargava said, adding that the "trend is clearly visible in global markets and is likely to enter India as well."

According to Bhargava, the Indian government has also laid down policies that favor small cars. Keeping in mind the current market trend, he said the company would be launching its global compact car A-Star in October which would boast of the advanced K-series engine that is not only fuel efficient but also complies with Euro-V emission norms. Additionally, in 2009, the company would launch Splash.

A-Star, MSIL's chairman said, would be launched in India first and then introduced to the European and other markets. The company plans to exports over 2,00,000 units of A-Star by 2010-11.

"We are at an advantageous position because we have an expertise in designing small cars. With demand for small cars going up, we will quickly scale up our R&D capabilities to design cars that are best suited for the Indian market," Bhargava said.

Despite a handful of car makers like Toyota, Honda, Ford and GM evincing interest in the small car market, MSIL remains unshaken. "Over the last few years, many cars have come into the market and you will agree that Maruti has not failed to compete," he said.

However, the A-star would not compete with Tata Motors' Nano, which, with a price tag of $2500, is touted as the world's cheapest car. "Maruti has always been in small car segment and we have always concentrated on that category of up to 1200 cc cars. But Nano is something which is a totally different segment and we are not venturing or competing in that segment," Bhargava said.