The much awaited small car from Honda Siel Cars India will be ready by the fourth quarter of next year, M Takedagawa, president and CEO, said on Monday.

The Honda Siel India chief was addressing a function to mark the doubling of capacity at its Greater Noida facility.

"The compact petrol 1.2 litre car will be configured to international markets and will not compete with the small cars available in India. Depending on market conditions, we will import the hybrid version from Japan later," Takedagawa said.

With small cars dominating over 70 per cent of the Indian market, HSCI is in the process of a feasibility study for a second compact car. No timeline has been given for this launch. "Our small car models do not conform to Indian market conditions," Takedagawa said.

HSCI did not disclose the number it hopes to sell in this segment. "All of HSCI's offerings in India will be in the premium segment," said Jnaneswar Sen, senior general manager, marketing.

Honda aims to boost auto sales in India by 32 per cent in the next financial year, after doubling the capacity at its plant to meet surging demand for City and Civic cars. The automaker plans to sell 90,000 vehicles in India in the year starting April, from an estimated 68,000 in the current fiscal year.

Honda has increased capacity to introduce new models and challenge Suzuki Motor Corp's 50 per cent share of the local car market. Honda had a 5.5 per cent share of the local car market in the year ended March 31, lagging behind Suzuki, Hyundai Motor Co and Tata Motors [Get Quote].

An extra 16,000 units will be added in 2009, taking the total to 160,000 units. The company has invested Rs 1,620 crore at this facility to date. 

The company has also started work on its second plant in Rajasthan. "Work will be completed by the end of 2009, and this could create a capacity of 60,000 units at an initial investment of Rs 1,000 crore," Sen said.

With an additional investment of Rs 2,000 crore in Rajasthan, "our total capacity would be 2.4 lakh," Sen said. Honda also plans to assemble the compact car at this facility. Up to 80 per cent of the small vehicle will be localised.

Sen also said that while there was pressure on pricing due to price hikes in petrol and steel, no decision had been taken yet on increasing the prices of vehicles for now.

With regard to manufacturing hybrid cars in India, Takedagawa said, "The current practice is to assemble the critical parts of the green vehicle only in Japan and later export it."

With an import content of between 20 per cent and 65 per cent on its existing stable of vehicles, "HSCI hopes to leverage Association of Southeast Asian Nation's free trade agreement to source auto components from India for its global manufacturing bases over the long term," said Praveen Paranjape, divisional head, manufacturing.