Lheem: Cool compact

New Delhi, May 5 (PTI): Hyundai Motor plans to introduce a compact car, which could be powered by a 1.2-litre diesel engine, in a bid to take on market leader Maruti.

The new car would enjoy the benefit of the excise duty cut announced in this year?s budget.

?We are developing a new version of a compact car as we need more models in this category,? said H.S. Lheem, managing director of Hyundai Motor India.

Dispelling talks about the new car being a replacement for the Santro, he said, ?This car will be in the same segment of the Santro and not a replacement of our flagship brand. The Santro will continue to be in the market.?

?I think we can have more than one car in the compact category as the volume of the segment is huge,? he said.

He did not disclose the specifications of the compact car and said the company was working on a 1.2-litre diesel engine.

?We are currently doing a feasibility study. The company is testing the engine in the country with regard to cost competitiveness as localisation is important,? he said.

HMIL?s parent company in South Korea already has a 1.2-litre diesel engine, which it exports to Europe.

Lheem also said HMIL would roll out two models in 2007. HMIL?s plan to launch a compact car assumes significance against the backdrop of the excise duty cut announced in the budget. While Maruti has five models, Hyundai only has the Santro.

Lheem also said the company is boosting the sales of the Getz, its high-end hatchback.

?We are working on improving its design, features and positioning,? he said.

Engine unit

Hyundai will set up a second engine and transmission plant in Chennai in two years, which could entail an investment of about $600 million. Also, it will hire 800 people for its R&D unit to be located in Hyderabad.

?In view of our vision to make India an export hub for compact cars, we will need a new engine and transmission facility as our production in India increases,? Lheem said.

He said the company was in the process of increasing production, which would touch an overall capacity of 600,000 cars once the second assembly unit goes on-stream by 2007.