Car markets in Western Europe and North America (and to some extent Japan) are not what they used to be. They are “stagnant” and have been for some time. Automakers are looking at developing countries for 21st century growth, and not surprisingly, the average driver in a developing nation is priced out of the Hummer and Ford F-150 markets.
Renault has been addressing the trend since 2004 when it launched the bare bones Logan — a cheap ride with a starting, shock-proof sticker price of about $7,500. Trouble is a rival is emerging in India that is poised to make $7,500 look extravagant. Tata Motors plans to debut its $2,500 car in January at the New Delhi Auto Expo, and put the cars up for sale later in 2008.
Renault and Nissan CEO Carlos Ghosn has been scoping out the operations of various potential Indian partners to help it solve the $3,000 price tag riddle. So far Ghosn has checked out Ashok Leyland and Bajaj Auto in hopes of cooking up a deal. J.D. Power and Associates has predicted that India will surpass China as the fastest-growing car market within the next five years. India has a pool of 60 million scooter and motorcycle riders who currently are priced out of car ownership. A car with a price of $3,000 or less would be nothing short of revolutionary for the average Indian motorist. Tata also plans to market its $2,500 car in Latin America, where it already has a distribution deal with Fiat, as well as Africa and the Middle East.
Ghosn is racing the clock. He wants to ink a deal so he can tout it at the New Delhi Auto Expo that is just a couple of short months away. If he can kill the costs that have thus far stymied the debut of a reliable $2,500 car, the Japanese may make a movie based on Ghosn’s comic book. And who knows? If fears of a US recession prove prophetic, Ghosn’s plan to bring a $5,000 version of the cheap car to Western markets could come just in time.
Comments
John MacAyeal Says:
November 9th, 2007 at 10:37 am
Thomas Friedman wrote recently that India has the opportunity to set a new standard and gain some serious cred from Mother Earth by just saying no to cars and developing a public transportation system that could inspire the rest of the world. More likely though, the convenience of having a car as opposed to having to schlep down to a bus stop or subway station and wait will probably win over the Indian commuter just as it has us.
Kevin Furr Says:
November 26th, 2007 at 3:39 pm
I’m sure everyone in India greatly appreciates a fat rich American like Friedman preaching self-denial to them.
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