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280,000-yen Indian car sends shock waves.
Competition spreads over the world for low-priced cars.

2, 04. 2008

   The 100,000-rupee car, Nano, unveiled by India's Tata Motors for the first time at the Delhi Auto Expo held in New Delhi is likely to accelerate the development of low-priced cars which has been a major theme of the auto industry for years. The Nano car is rather highly evaluated as some executive at Suzuki Motor said the car "seems to be good, according to what suppliers tell me." The car has only one wiper, one door mirror and other things that make it look like a shabby car. But, the revolutionary low price of 100,000 rupee (280,000 yen) for a car can not be achieved by ordinary methods. Japanese, American and European carmakers are trying their utmost to get one of the Nano cars as quickly as possible so that they can tear it down.

Price is two or three times that of ordinary motorcycle

Nano carefully watched by auto industry
Nano carefully watched by auto industry

   The Nano was unveiled on Jan. 10, 2008 at the joint booth of Tata Motors and Italian Fiat at the motor show in front of many press reporters. The two companies have a close tie-up relationship with each other. It could be said a motor show held in India had never attracted so much world attention before.

   It took four years to develop the Nano, which is rear-driven with a rear 33ps, 623cc, all-aluminium-made, twin-cylinder gasoline engine. It is 3.1-meter long, 1.5-meter wide and 1.6-meter high. Rata N Tata, chairman of Tata Motors, who made the production of the 100,000-rupee car possible, said he "wants to contribute to safe living of the people" by recommending the car to Indian fathers who carry wife and two children on a motorcycle. The price of 100,000 rupees is equivalent of a half of that for the cheapest conventional small car or two or three times that for a ordinary motorcycle. Aim is set for persuading motorcycle riders to switch their machines over to cars.

   Japanese and European carmakers have long been making efforts for developing low-priced cars. The buying power of the people and business progress in BRICs and other newly developing countries were taken into consideration in making the efforts. The target price for such low-priced cars is believed to be 600,000 to 1 million yen. The price for the Nano is even less than half the target price. Persons in the car industry remarked that the Nano is even cheaper than what people ordinarily accept as a price for a low-priced car. It is rather a "super low-priced car," they said

Toyota, Nissan join in low-priced car development

   The Entry Family Car (EFC), which Toyota Motor is planning to start developing in the near future, is meant for sale in India and Brazil. The target price is expected to be set at 700,000 to 800,000 yen. Nissan Motor is also planning to launch the production of low-priced cars which the company has no experience of producing in the past. Nissan is expected to employ the know-how of its alliance partner Renault, which is traditionally good at making small cars as a Latin carmaker. Nissan plans to sell cars priced at below 1 million yen by 2010. Carlos Ghosn, president of Nissan, said the company plans to sell such low-priced cars over the world, indicating they will be introduced also in Japan. GM and Ford have also disclosed their plans for the development of low-priced cars.

   The "low-priced car battle" which originated in India is seen to spread over the world. This movement is not unrelated with the fuel price increases and the global warming. In Japan, which faces sluggish car sales, an executive of a leading carmaker has said there are certain to be customers who would be satisfied with cars as long as they could be used as means of transportation without being fussy about their other aspects.

   Generally, the higher the price of a car, the higher the profit rate. In other words, profit from selling cars goes up exponentially as the price of the car goes up. This indicates that carmakers will face management difficulty if they spend their all energy for dealing with low-priced cars. There are only a few car manufacturers in the world that can remain in business by producing only high-priced, high-performance cars. The main concern of the carmakers of the world is now, therefore, to find out ways to keep balance between the attractiveness of low-priced cars and their profitability. At the same time, they have also to find ways to sell more cars at higher prices than their rivals. Their attention is focused for the time being on whether or not the Nano cars will bring in satisfactory profit. The production of the Nano is to start later 2008 at a plant with a production capacity 250,000 units per year to be sold in India.

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