What do we say about India’s growing small car segment that has not been said already. Bringing joy (and high) to various car manufacturers is none other but the hatchback segment in India. While some car makers braced the market early and are reaping the benefits, others are taking a cue and trying to follow suit.

Car manufacturers like Hyundai, Maruti Suzuki and Chevrolet have established themselves as the invincible experts in the small car domain. And then there are the late bloomers like Ford, which finally launched a small car, and is nothing less than ecstatic about it. Nissan, Toyota and Honda are also launching their small cars in India in the upcoming months. While Nissan and Toyota are aiming to mass market their cars, Honda wants to keep it rather exclusive by tagging it expensive.

Honda is present in India through a joint venture with the Siel Group, and supposedly, is developing a hatchback which will be positioned above the volume-driven small car segment. The company plans to launch it by 2011.

“Our small car project is very much on schedule. We have not decided the likely price or the engine capacity of the small car, but the small car will be positioned slightly higher than the volume market,” Honda Motor Corporation Chief Operating Officer (Asia and Oceania) Fumihiko Ike told reporters.

Now Mr Ike did not tell us about his idea of the “volume market”, but in traditional terms cars priced between Rs 2-4 lakh contribute towards most of the passenger car sales in India. And we all know the top grosser among these are Maruti Suzuki’s Alto and WagonR, Hyundai Motor’s Santro, General Motors’ Spark and Beat and Ford India’s Figo (petrol version).

“Everybody is looking at the volume market, while historically our cars have always been positioned slightly higher than the volume segment,” Ike said, adding the company will not bring in a sedan version of the upcoming small car.

Honda Siel Cars India (HSCI) had showcased the proposed small car at the Delhi Auto Expo in January this year. The company had revealed that it was aiming to launch the small car in the country by the third quarter of 2011 and was also considering to price the car at less than Rs 5 lakh. Yes, we are surprised too! A car coming from a manufacturer whose smallest deal (Jazz) starts at Rs 7.11 lakh (ex-showroom, Delhi).

Last week, HSCI newly appointed President and CEO, Takashi Nagai, had revealed that the company would rely on some heavy localisation of components to make the cars more competitive in the Indian context. So that includes the localisation of the upcoming small car too.

Honda is aiming for a minimum of 80 per cent localisation for its upcoming car. The tried and tested method of localisation has already been adopted by Honda. Honda Jazz and City have a 77 per cent and 76 per cent localisation of components respectively. The Civichas 74 per cent and the Accord 28 per cent local components.

Important to note is that Honda has witnessed declining sale in a market which grew by 20 per cent in the last fiscal year. Ike said: “It is a matter of concern no doubt, but we are not a volume player.” HSCI had registered 2.13 per cent fall in sales to 3,578 units in April this year. In March also, the sales plunged down by 19.54 per cent to 5,928 units.

When quizzed about a diesel engine, Ike said, “Globally we have diesel engines of higher specifications and now we are developing diesel engine with lower specification also, but it is basically for the European market.”

He said introduction of a diesel-powered car in India will “depend on the market condition”.