$2500 Dollar Car

[cheerful_deviant]

Anyone else been following this in the news?

Article

This company, Tata of India, anounced several years ago that it was in the design phase of making a car for developing markets. The car was dubbed the 1-lakh car (or $100,000 in Indian dollars)

The car is to initially be sold only in India initially but it has a potential to be a huge influence in other parts of the developing world such as Africa.

At first all the established car manufacturers laughed at them, especially the 'Big Three'. Then about 6 months ago as the release date started getting closer, they start getting nervous. Now other manufacturers are gunning for the 'entry level market' or cars priced below $5000 new. Essentially people who now own no car or scooters.

I wonder how many Americans realize just what this means for the American Auto industry. Cheap cars being manufactured in India and China are only a few years away. Several Chinese branded cars (not just other cars manufactured in China) will be here this year or next. And while it's highly doubtful that anyone in the US will be driving a $2500 Nano with no aribags, AC or even radio anytime soon, the manufacturing processes that allow that car to be made can easilly be applied to other, larger cars that can be sold in the US.

Looks to be just one more nail in the coffin of the Big Three.

 

[impressive]

The Big Three will probably make behind-closed-door deals with auto insurers, who will then refuse to insure them (or make rates prohibitive).

 

[R. Richard]

If you want to know how a bare-bones, bottom of the pile car will do in the USA, do a Google search on "Yugo auto"

 

[jomar]

Actually, quite a few car companies area developing/exploring small, city car concepts like the 1-lakh (Cheverolet, GM, VW, Toyota, etc).

 

[oggbashan]

That car is suitable for rural India but would never pass European (or US) safety standards.

Tata are trying to reinvent the Model T Ford - to provide transportation to people who couldn't otherwise afford it. Anyone who has been used to a modern vehicle would find it incredibly crude by comparison. So was the Model T (or the original Volkwagen Beetle, the Citroen 2CV, the Austin 7).

The French have such minimal vehicles but can't sell them beyond France.

Tata could copy what Ford advertising in the 1930s said about their Ford Popular "Better than standing at a bus stop". Not much better, just better.

Og

 

[3113]

Looks to be just one more nail in the coffin of the Big Three.

Not that they need another nail, but it does take a while for imported cars to even be allowed to sell here. My brother very much wants a Smart Car and the number of hoops that the company has had to jump through to be allowed to sell it in our state are pretty amazing. He's been getting e-mails on their progress for two years now.

Cars sold in the U.S. have to meet a ton of regulations from emissions to safety. If they don't, then they don't get sold here.

I also don't think price is that much of a consideration when it comes to cars. Americans are wacky that way. We'll put ourselves into debt trying to pay off a $40,000 truck. When it comes to cheap, we rarely want a cheap car, and if we do, we want it really cheap. Like a $500 used vehicle. So I think it's less a matter of price and more a matter of how these cars look and drive.

Cheapness isn't what sold the Japanese cars, it was compactness, which was then in vogue.

 

[Jenny_Jackson]

The car is to initially be sold only in India initially but it has a potential to be a huge influence in other parts of the developing world such as Africa.

I don't think the Big Three Auto Makers are too worried. The Tata is so stripped down it cannot pass Federal Highway Safety Standards.The car is stipped down to the very basics because it is not intended for the U.S. market.

Look at a new car - Air Conditioning, On-Star, Built in CD changer, Air Bags, impact absorbing bumpers and so on. On the Tata? Nothing.

 

[rgraham666]

I'm still not getting a car. I'd rather do something safer than drive on our roads.

Like defusing IEDs in Iraq. At least everybody knows what they're doing over there.

 

[emap]

Everyone knowing what they are doing over there is debatable.

There is no way a small little tiny car with barely shocks or brakes no air conditioning or radio is going to sell in the US. However it will sell huge in developing countries because they simply can't afford a car with all the good stuff, like a big backseat for those times when you just can't wait to get home or to the motel.

The companies here have nothing to worry about with this indian company right now. Ten, twenty years from now after they have made a killing elsewhere and can afford to develop a bigger car with all the perks however they should start to worry, a little teeny tiny bit. Americans seem adverse to change, look at the popular cars, they all look alike until you really look close.

 

[Roxanne Appleby]

The Big Three will probably make behind-closed-door deals with auto insurers, who will then refuse to insure them (or make rates prohibitive).

More likely deals with federal regulators and Naderite nanny-statists, who are now in bed with the anti-free trade union crowd and so get a two-fer. Insurance companies will probably be willing co-conspirators, though.

To be fair, aside from "best the enemy of the good" nanny-statism. a 1,500 lb.*, 33 hp car won't be much fun on US expressways with 80,000 lb semi-trucks blowing by at 65 mph.


* A guess - none of the articles give weight. It's all steel, all has a 2-cylinder engine of about 650 cc. Kinda like the old Fiat 500's - the "cinqua-cento" - that put Italians on the road.

 

[TxRad]

More likely deals with federal regulators and Naderite nanny-statists, who are now in bed with the anti-free trade union crowd and so get a two-fer. Insurance companies will probably be willing co-conspirators, though.

To be fair, aside from "best the enemy of the good" nanny-statism. a 1,500 lb.*, 33 hp car won't be much fun on US expressways with 80,000 lb semi-trucks blowing by at 65 mph.


* A guess - none of the articles give weight. It's all steel, all has a 2-cylinder engine of about 650 cc. Kinda like the old Fiat 500's - the "cinqua-cento" - that put Italians on the road.

The weight doesn't have anything to do with it or the HP. My 650 Motorcycle even with my fat ass on it only weights about a thousand pounds and semi's (by the way, most run at 40,000 lbs) don't blow me around. I remember the little Fiat's from the 60's My girlfriend drove one. I could kill the engine by putting my palm over the exhaust pipe. It keep up fairly well even on the interstates back then.

 

[colddiesel]

Most developed countries buy new cars at the rate of about 1 million new cars per annum to every 18 to 25 million people. India at the moment with a population of 1.1 billion buys slightly more new cars than Australia per annum which has a population of only 20 million. Clearly therefore the market for this contraption is in India.l

 

[oggbashan]

...
* A guess - none of the articles give weight. It's all steel, all has a 2-cylinder engine of about 650 cc. Kinda like the old Fiat 500's - the "cinqua-cento" - that put Italians on the road.

It's not all steel. There's plastic and aluminium in the build. I have tried to find the weight. Even TATA's official site doesn't give that but they emphasise how much weight they have saved. I wouldn't be surprised if the basic model is under 1000lb.

In the UK there used to be a tax-break for three-wheeled cars weighing under eight hundredweight unladen. The Reliant three-wheeler achieved that by making the spare wheel an "extra". Several of the bubble-cars of the late 50s and early 60s were even lighter than the Reliant.

Og

 

[Emperor_Nero]

But all this talk is missing the way this is going to directly effect all of us ... and that is if drivers in India and other nations that don't currently have a large proportion of auto ownership in the population start to buy these things, they also start buying more and more of that gasoline stuff that we do all use and the prices for gas start to rise even more because of the increased demand from a previously untapped market.

 

[starrkers]

I think the problem for the big three is a long way off yet. These cars are designed for the third world market, to get people into cars.
The trouble will come when they ARE in cars and the manufacturers of these buzz boxes start upgrading to better comfort and safety. And their customers start upgrading.
Will the big three be able to muscle into the newly created market, or will customers remain loyal to those that first catered to them?

 

[JAMESBJOHNSON]

I've owned 6 GEOs since 1985. They stopped making them in 2001. I own a 2005 Chevy, but use my GEO for work. It gets 40 miles per gallon and keeps on ticking.

But Americans luv their SUVs and pickups.

 

[Katyusha]

I wonder how many Americans realize just what this means for the American Auto industry. Cheap cars being manufactured in India and China are only a few years away. Several Chinese branded cars (not just other cars manufactured in China) will be here this year or next. And while it's highly doubtful that anyone in the US will be driving a $2500 Nano with no aribags, AC or even radio anytime soon, the manufacturing processes that allow that car to be made can easilly be applied to other, larger cars that can be sold in the US.

Looks to be just one more nail in the coffin of the Big Three.

Another nail is Honda's Clarity. It is to be released on a very limited basis here in the U.S. starting in June, only for lease. $600 a month for three years, but the thing doesn't run on any gasoline at all. It runs on hydrogen fuel cells. Will be released in only a few cities in CA because they have hydrogen refilling stations.

I hear it has an effective range of about 250 miles or so, well below what we're used to in our gas-guzzlers. HOWEVER. Honda's continuing to work on increasing its range and they are also working on a home refueling station that will easily fit inside someone's garage. In the meantime, and keep in mind I haven't heard anything about this part at all, I wonder if they're partnering with the Swedish company that's created hydrogen power stations that will run a whole house, and are about the size of a standard refrigerator.

Anybody wonder just WHY we're continuing to fall behind the rest of the world?

 

[Katyusha]

I've owned 6 GEOs since 1985. They stopped making them in 2001. I own a 2005 Chevy, but use my GEO for work. It gets 40 miles per gallon and keeps on ticking.

But Americans luv their SUVs and pickups.

My husband has a little 1996 Saturn SL-1. He loves it. It gets 42 miles per gallon and he gets 100 more miles on his 12-gallon tank than I get on my 16-gallon tank. I have a 2000 Mercury Sable. I've had some problems with my car recently but nothing too serious (although I'm hoping these nothing-too-seriouses aren't heralding the start of the more serious problems that ultimately lead to needing a new car). He's got almost 200,000 miles on the original clutch...'scuse me for bragging on his behalf.

You're right...Americans do love their SUV's and pickups. When it becomes time for me to get a new car, it's probably going to be a hybrid of some sort, and small, but not so small that I can't haul around my inventory in it.

 

[Katyusha]

The companies here have nothing to worry about with this indian company right now. Ten, twenty years from now after they have made a killing elsewhere and can afford to develop a bigger car with all the perks however they should start to worry, a little teeny tiny bit. Americans seem adverse to change, look at the popular cars, they all look alike until you really look close.

No...they have to worry about the Swedish and Japanese car companies.

And yes, U.S. culture is very averse to change. If we weren't, we'd still be leading the world in the Swedish and Japanese types of pioneering technology instead of falling further and further behind. We're so averse to change, and we cling so hard to the if-it-ain't-broke-don't-fix-it mentality that we literally can't see when something's not working anymore.

 

[Katyusha]

There is no way a small little tiny car with barely shocks or brakes no air conditioning or radio is going to sell in the US. However it will sell huge in developing countries because they simply can't afford a car with all the good stuff, like a big backseat for those times when you just can't wait to get home or to the motel.

The companies here have nothing to worry about with this indian company right now. Ten, twenty years from now after they have made a killing elsewhere and can afford to develop a bigger car with all the perks however they should start to worry, a little teeny tiny bit. Americans seem adverse to change, look at the popular cars, they all look alike until you really look close.

Maybe not...but one has to wonder if people will start demanding that the price of cars come down here, which could hurt not only the Big Three but also Japanese, German and Swedish automakers in our market. I remember when I thought $10,000 was a ridiculous price for a NEW car. Now I think that I'll be extremely lucky if I can find a car with any quality at all for that price.

But knowing how we tend to work...if it should come to pass that Americans start demanding lower-priced quality cars, the Japanese, German and Swedish automakers will begin working on that demand long before the Big Three do.

 

[JAMESBJOHNSON]

KATYUSHA

I filled my little car up today for 9 dollars, and drove 140 miles....3 gallons of gas.

 

[rgraham666]

I don't believe Americans are averse to change. But the people who manage American companies are. Which is common throughout history. When you were the most powerful the last thing you want to do is change the system that made you powerful even if it is now sclerotic.

Also, American companies are obsessed with short term profits. If you don't have a successful year (or quarter) you're in trouble. This mitigates against risk taking. And R&D is very risky. No one can guarantee success in R&D. So to people focused on profit R&D looks like a sinkhole of funds.

Add in the courtly nature of modern corporations, where any mistake on an individual's part gets them the equivalent of a knife in the ribs, and you have a system and people who can't compete.