MUMBAI, Dec 23: Hindustan Motors (HM) has planned to confine production of the Mitsubishi Lancer to 24,000 cars in its Tiruvallur plant near Chennai. The balance capacity of 20,000 will be used to accommodate another vehicle for which a feasibility study is being carried out jointly by HM and Mitsubishi.

All these projections have been made by HM for the year 2002. Sources say that it makes little sense to use the full capacity at the Tiruvallur plant solely for the Lancer given the slowdown in the mid-size car segment. "It is far more practical to have a diversified product range," they add.

The partners are, reportedly, inclined towards the idea of introducing a multi-utility vehicle in the market. However, the biggest limiting factor could be cost which, in turn, depends on the pace of localisation. Observers say that an MUV makes sense as there is still a potential demand in this segment. This is the reason why even an entrant like Toyota has decided to bring an adapted version of the popular Kijang to India instead of some of the car models.

The Lancer will be introduced in July 1998 and production till March 1999 is estimated to be 5,000 units. For the next financial year (1999-2000), this will increase to 15,000 cars and will eventually touch 24,000 cars in 2002. The Lancer will be powered by both diesel and petrol versions and observers say that the fuel combination mix will again see interesting trends in consumer preference.

Though no decision has been taken yet on the pricing of the car, sources say the 1500 cc petrol Lancer will be priced at around Rs 6.7 lakh (on-road price in Delhi), while its 2000 cc diesel counterpart will be dearer by a lakh more. "HM will decide on the production mix only after gauging initial demand, but the company believes that there will be a tilt towards the diesel version," they add.

The Lancer, with its pricing, will first compete with the Ford Escort, (which has both diesel and petrol versions), Cielo and the petrol-driven Astra. However, its biggest competitor will be the Honda City which sports a price tag of merely Rs 5.8 lakh for its 1300 cc petrol version (on-road price in Delhi).

The City, in that sense, is expected to eat into the shares of the Maruti Esteem, Cielo, Astra and the Escort. The Esteem was till now the cheapest in this list of four but the City may just change all that. Observers say the Lancer will not be far behind. Interestingly, some of the components for the City are being sourced from Honda's plant in Thailand, while in the case of the Lancer, this is being done from Japan.

Incidentally, Mitsubishi is yet to pick up its ten per cent stake in the Lancer project. Sources say that this is largely due to the fact that the car industry in Japan has been going through a rough patch which may have prompted Mitsubishi to defer this decision. "However, the company is very keen on its stake as of now," sources said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.