NEW DELHI -- Hindustan Motors Ltd., one of India's oldest car companies, said on Thursday it was talking to five global firms to make cars for them on contract, in a bid to use excess capacity at one of its plants.
The automaker, which has produced the vintage-looking Ambassador car for many decades, makes the Lancer sedan and Pajero sports utility vehicle using technology from Mitsubishi Motors Corp at its plant in the city of Madras.
G. Shyamsundar, vice-president at Hindustan Motors, told reporters the five firms included Germany's Volkswagen and BMW as well as Malaysia's Proton.
"The discussions are an ongoing process. They can share our welding line and the paint shop," Shyamsundar told a news conference to launch a new Lancer car.
India, Asia's third largest economy, has attracted a host global car firms since it liberalised its industry a decade ago, including General Motors, Ford and Fiat.
Analysts expect the combined sales of cars, vans and utility vehicles in the country to rise by 10 percent annually over the next decade helped by rising incomes and low vehicle penetration. Sales are expected to reach nearly a million in 2003-04.
Shyamsundar said the Madras plant could make 12,000 cars a year on a single shift basis, of which the company expected to use only about 4,500-5,000. It could let out much of the rest.
The Calcutta-headquartered firm already makes engines for Ford's Ikon sedan in India on contract at another plant in central Madhya Pradesh state and has signed a similar deal with the local unit of General Motors Corp.
Shyamsundar said he could not say when any of the companies would reach a decision to enter the Indian market.
Hindustan Motors introduced a more powerful Lancer sedan on Thursday powered by a 1.8 liter engine and new transmission that offers both manual and automatic options in a single unit. The car is priced at 895,000 rupees ($19,757).
The firm estimated the country's automatic transmission segment at 400 to 500 cars a month. It expected the new Lancer, that will compete with premium cars like the Chevrolet Optra and Toyota Corolla, to sell 125 units of its new variant a month.
Shyamsundar said Hindustan Motors sold 2,100 Lancers in the first 10 months of 2003/04 (April-March) and expected to finish the year with sales of 3,000 units. He said he expected sales to rise to 4,500 units in 2004/05.