India's $2,500 car talk of auto show; But Tata Motors Nano isn't even there

IDNUMBER 200801160015
PUBLICATION: The Windsor Star
DATE: 2008.01.16
ILLUSTRATION: Graphic: (See hard copy for graphic);
BYLINE: Jeff Green
SOURCE: Bloomberg


India's $2,500 car talk of auto show; But Tata Motors Nano isn't even there


The most-talked-about car at the Detroit auto show this year isn't even present: Tata Motors Ltd.'s $2,500 Nano.

The vehicle planned by India's largest truckmaker would violate emissions and safety regulations in the U.S., Europe and Japan, auto executives from those markets said. The Nano wouldn't meet consumer expectations in developed countries for creature comforts such as air conditioning, they said.

Yet they're all wondering how to respond to it. "What we're seeing really is the automotive world is divided into two distinct markets," General Motors Corp. vice-chairman Bob Lutz told reporters Tuesday at the North American International Auto Show.

"It's akin to the coming of the Ford Model T," Aaron Bragman, an analyst at Global Insight Inc. in Lexington, Mass., said in an interview, also at Detroit's annual exhibit of the industry's latest models.

With the U.S. market coming off its slowest year in a decade, sales down in Japan and Western Europe stagnating, GM, Toyota Motor Corp. and other automakers are turning to emerging markets such as India and China, where sales are growing more than 10 per cent a year.

For GM, Toyota and other automakers the Tata entry means "pressure to come down to that price and play in that field," Bragman said. "It's a huge untapped market, and they will either have to find a way to do it themselves or find someone who can and partner up."


Mumbai-based Tata's unveiling of a prototype of the Nano, India's cheapest car, at the Delhi auto show on Jan. 10 is forcing established automakers to decide whether they want to go head-to-head with such entrants, said John Casesa, managing partner at Casesa Shapiro Group in New York.

Ford Motor Co. decided to announce plans for an Indian investment away from the Delhi show last week to avoid being overshadowed by the Nano news, Ford executive vice-president John Parker told reporters late Tuesday.

"It is a groundbreaking product," Parker said. The Nano will "cause people to think differently about the car. I have a lot of respect for Tata."

The cheapest car in the U.S. is the $9,995 Chevrolet Aveo from GM. In Japan that distinction goes to the Daihatsu Esse at about $6,000. In Europe the Dacia Logan from Renault SA starts at $11,900.

Tata's proposed car has four doors, one windshield wiper and a side-view mirror on the driver's side only. It has reached a top speed in tests of 105 km/h.

"There are hundreds of millions of people coming out of poverty in emerging markets that still won't be able to afford what we define as an automobile for many years," Casesa said.


Local NDP MPs called on the federal Conservatives Tuesday to help reopen Windsor's Ford Essex Engine Plant with a $30-million contribution.

NDP transport, auto policy and border critic Brian Masse (Windsor-West) and Joe Comartin (Windsor-Tecumseh) urged the feds to help bring a new Ford engine product to Windsor.

The provincial government has agreed to pay its $30-million share to bring the proposed assembly of a new V8 engine to the Lauzon Road plant, which closed in November after 26 years.

Government representatives have only said that Ottawa is "in discussions" with Ford about the project. Masse said the lack of action is "an outrage."

"There is an economic opportunity to invest with these $30 million," he said.

"The plan is there, the CAW ... and the company have done their jobs."

Masse warned Windsor could lose another great economic opportunity, as it did in 2003 when the city missed out on a chance to produce Chrysler Dodge Sprinter vans.