Blog: Dave LeggettWhat exactly is a low-cost car?

Dave Leggett | 10 April 2008

What's a low-cost car? It's clearly defined on low-cost but it's a very broad category in terms of the sorts of vehicles that qualify - there are different approaches to getting to that low price point. Mark 'Coolbear' Bursa has produced a report for us looking at the subject.

One talking point in the industry is the Nano and whether it might be exported to Europe - it was shown in Geneva after all. I reckon Geneva was more about Tata announcing itself on the world stage, just ahead of the JLR deal. Nano got the firm plenty of column-inches in the world's press.

First and foremost, Tata is a car devised for the Indian market. Ambitious volume targets have been set for it and that's the core business opportunity and challenge for the next few years. If Tata makes a profit and can keep the cost low enough in the face of rising costs - such as materials - then that will be a considerable achievement.

Will Tata want to sell the car outside India? Other Asian markets are a possibility, as is Africa. The basic proposition - a cheap entry level low-tech car that can be made locally - will apply.

And then further down the road, there's the idea that a small funky car like Nano could find some customers in developed markets. It's not a daft idea, but it comes with costs. The Nano would have to be extensively reworked to meet EU regs in areas like crash-testing, comfort and that will add several thousand euros to the price tag. But it might still work if the final cost remains low for Europe and there's enough volume to justify the additional engineering work on 'Nano Plus'. Who would want to distribute and sell this razor-slim margin car in Europe? There's a question - certainly not Fiat partner Tata.

Some people are getting a little carried away with Nano - great concept though it is. It still has to crack the Indian market and that's by no means a foregone conclusion. Market leader Maruti-Suzuki will not just roll over, either.

RESEARCH: Low-cost cars: opportunities and challenges


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