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In India, 'green cars' look like a hard sell
Wall Street Journal, 6 January '10
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Toyota Motor Corp.'s Prius and a number of other green-themed vehicles got their India debut at this week's New Delhi Auto Expo, but auto executives and experts agree it will be years before many people buy them.

Toyota said this week it would start selling its hybrid Prius, which runs on both gasoline and electricity, by the end of this year. India's largest auto maker, Maruti Suzuki India unveiled its answer to the Prius an electric concept car called Eeco Charge that it won't produced in mass until 2015, if ever.

India's Tata Motors, South Korea's Hyundai Motor Corp., General Motors Co. of the U.S. and France's Renault SA also have electric or gasoline-electric hybrid vehicles on display here this week. Toyota's newly launched Prius hybrid car sit on display at the Auto Expo 2010.

Hyundai brought in Bollywood super star Shah Rukh Khan to unveil its electric car, the i10 Electric, at the Auto Expo, but the company doesn't expect to sell many. "I don't think India is really ready for it," said Arvind Saxena, director of marketing and sales at Hyundai. "We don't have the infrastructure to use this car."

Vehicles like the Prius have become popular in developed countries. In the U.S., Prius sales fell 12% last year to about 159,000 vehicles from 2008 amid economic weakness. But it remains one of the nation's most popular vehicles.

Indian consumers are extremely price sensitive, and few are willing to pay double the standard sticker price it can cost for a battery-powered vehicle. Electric-car batteries likely would still be more expensive than gasoline-fuelled cars and subject to India's high tariffs because they would come from abroad.

"The battery will end up costing as much as the vehicle itself," said Paul Blokland, director of Segment Y Automotive Intelligence Pvt. Ltd. a Goa-based automotive consulting company. "Adding the green element just costs too much."

Analysts project that the Prius will cost more than US$ 40,000 in India.

Few cities in India have regular power and few homes have parking spaces near electric outlets. Regular blackouts make it tough to charge even a cell phone in much of India. Therefore, a battery powered car is unlikely to sell well, analysts and industry executives said.

"You can bring in electric vehicles, that's fine. But where are you going to get the electricity?" said Pawan Munjal, managing director and chief executive of Hero Honda Motors, India's largest motorcycle maker.

Electric scooters and motorcycles have been on Indian roads for a few years. After initial interest, sales of battery-powered two-wheelers has plunged over the last two years at two of India's top electric two-wheeler makers, TVS Motor Co. and Electrotherm India. Both companies combined sold around 12,000 battery powered vehicles last year, down from 22,000 in 2008, Mr. Blokland said, amid concerns about cost and battery replacement.

When the price is right and regulations required it, Indians have embraced environmentally friendly options. India has close to one million compressed natural gas vehicles on the road, mostly taxis and trucks. That makes it one of the largest user of CNG vehicles in the world, according to industry group Asian NGV.

Natural gas has worked in India because CNG vehicles are close to the same price as gasoline powered ones. It is also relatively inexpensive to switch a regular car or truck to CNG.