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Economy cars
24/3/09 20:30![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
allhatnocattle.livejournal.comEveryone knows about the financial trouble of the Detroit big three. So that's about 'nuff said on that.
Then we have France's big three (er, two now) Renault and PSA Peugeot-Citroen who look to be on the receiving end of large gov't loan, if the EU approves it. The move is intended to trickle down to smaller support companies (sound familiar?) and rescue the industry. Also there is talk that niche carmaker Heuliez is also set to receive help if certain conditions are met.
But one of the largest vehicle manufacturing giants in the world has to be India in pure numbers. They make a lot of bikes, motorcycles, 3wheelers and small cars, much of it foreign owned, but not all. 2 million units in annual car production puts India 10th on the world annual production. The country is set to rise up these ranks in the coming years with the production of the world's most economical car.
Today Nano had it's first Tata roll off the production line. The goal is 30-50,000 units this year and 250,000 next year. All the buzz is about the price. It is being sold (depending on the article I read) for just $2000-$2500. Mind you this is a no frills car. No radio, no cassette player, no air conditioning, roll up windows, the most basic seats, no emissions controls, etc.
Now, this sounds like a third world vehicle. No threat to Detroit, Japan, Germany, Korea, England or France. Think again. Tata has every intention to sell to Europe and the USA by 2012. The USA model will meet emissions and safety standards and sell for about $4-5000.
Even the India model Tata isn't that bad. A 623cc engine, getting 56mpg and putting out just 101gm/km isn't that far off the benchmark set for American vehicles. The engineers have left enough versatility for the possibility of a diesel, electric and even the new compressed air engine that Tata has developed. (Awesome zero emissions idea with infrastructure of air compressors already in place)
But what I'm thinking about is Detroit. I can get a petty decent brand new American car for under $20,000. If I had $20k. Frankly most folks don't have access to that kinda dough immediately. That means a bank loan or lease or whatever. But $5000 sounds like a reasonable sum that would be accessible to even those without credit.
I mean if you need a car, not as a status symbol but as a means to get to work and to pick up the groceries, then it doesn't really matter if there's a radio or if you're sitting on a wooden bench. It's a means to get from A to B. I can't really tell a Ford/Honda/? dealer that they can keep the radio and most of the seat stuffing so they'll come down in price. These extras come standard in all current models.
We have seen super economy cars before (remember the Yugo? Fiat? ) I would think for Tata to succeed, they at least have to match quality of Detroit. I mean it has to be on the road more then it'll be in the shop. The reviews will be in in the coming weeks but the general impression is rather good, given that you get what you pay for.
But I'm thinking of the trend. Is this a trend? For consumers who just lost 30% or more in the stock market, maybe it is. Is this a direction that Detroit or where-ever should consider? Well if money is the issue for manufacturers, then maybe it is. Cheaper to produce and the profits... Well, this vehicle itself will make Tata a tidy 10-15% profit, where 5-7% is the industry norm. And then there's profit on all the extras you can put into this vehicle. Radios cost a manufacturer what? And what could they sell them for? And given the choice between a $5000 Nano and a similar priced Chevy, I trust the reputation of American quality already.
Then we have France's big three (er, two now) Renault and PSA Peugeot-Citroen who look to be on the receiving end of large gov't loan, if the EU approves it. The move is intended to trickle down to smaller support companies (sound familiar?) and rescue the industry. Also there is talk that niche carmaker Heuliez is also set to receive help if certain conditions are met.
But one of the largest vehicle manufacturing giants in the world has to be India in pure numbers. They make a lot of bikes, motorcycles, 3wheelers and small cars, much of it foreign owned, but not all. 2 million units in annual car production puts India 10th on the world annual production. The country is set to rise up these ranks in the coming years with the production of the world's most economical car.
Today Nano had it's first Tata roll off the production line. The goal is 30-50,000 units this year and 250,000 next year. All the buzz is about the price. It is being sold (depending on the article I read) for just $2000-$2500. Mind you this is a no frills car. No radio, no cassette player, no air conditioning, roll up windows, the most basic seats, no emissions controls, etc.
Now, this sounds like a third world vehicle. No threat to Detroit, Japan, Germany, Korea, England or France. Think again. Tata has every intention to sell to Europe and the USA by 2012. The USA model will meet emissions and safety standards and sell for about $4-5000.
Even the India model Tata isn't that bad. A 623cc engine, getting 56mpg and putting out just 101gm/km isn't that far off the benchmark set for American vehicles. The engineers have left enough versatility for the possibility of a diesel, electric and even the new compressed air engine that Tata has developed. (Awesome zero emissions idea with infrastructure of air compressors already in place)
But what I'm thinking about is Detroit. I can get a petty decent brand new American car for under $20,000. If I had $20k. Frankly most folks don't have access to that kinda dough immediately. That means a bank loan or lease or whatever. But $5000 sounds like a reasonable sum that would be accessible to even those without credit.
I mean if you need a car, not as a status symbol but as a means to get to work and to pick up the groceries, then it doesn't really matter if there's a radio or if you're sitting on a wooden bench. It's a means to get from A to B. I can't really tell a Ford/Honda/? dealer that they can keep the radio and most of the seat stuffing so they'll come down in price. These extras come standard in all current models.
We have seen super economy cars before (remember the Yugo? Fiat? ) I would think for Tata to succeed, they at least have to match quality of Detroit. I mean it has to be on the road more then it'll be in the shop. The reviews will be in in the coming weeks but the general impression is rather good, given that you get what you pay for.
But I'm thinking of the trend. Is this a trend? For consumers who just lost 30% or more in the stock market, maybe it is. Is this a direction that Detroit or where-ever should consider? Well if money is the issue for manufacturers, then maybe it is. Cheaper to produce and the profits... Well, this vehicle itself will make Tata a tidy 10-15% profit, where 5-7% is the industry norm. And then there's profit on all the extras you can put into this vehicle. Radios cost a manufacturer what? And what could they sell them for? And given the choice between a $5000 Nano and a similar priced Chevy, I trust the reputation of American quality already.
