India Debuts World Cheapest Car the RS1-lakh

India's Tata Motors is about to revolutionize the automotive industry with the introduction of the "World's Cheapest Car." Tata is set to debut the Rs 1-lakh at the Ninth Annual Auto Expo in New Delhi on January 10^th 2008. Production is scheduled for mid 2008. To come in under the estimated $2500 sticker price, Tata has to be very creative with every step of the process.

Tata uses online auctions for a larger than the normal percentage of it's part sourcing and cuts material costs by literally cutting out materials. A good example of this is the use of a hollow steering column as opposed to the normal solid standard columns. Another way to keep the costs down, no optional equipment. This mean "The Peoples Car" will have no radio, no power steering, no power windows, no power locks, and very little in the way of horsepower. Losing all these extras mean all the wiring brackets, antennas, motors all contribute to reducing weight. Which is good because the Rs 1-lakh will ship with a 600cc engine that is outperformed by most American's riding lawnmower. With plastic body panels the need for a high performance engine is significantly lowered. Other extras left on the chopping block include auto leveling headlights, as well as one of the of windshield wipers. Trunk space has also been reduced and been described as barely large enough for a briefcase. Don't even bother asking about air conditioning.

Despite all this, Tata claims the Rs 1-lakh will meet all safety and emission standards in the markets it is sold in, primarily India with expansion plans throughout Asia. The attention garnered since the conception of the Rs 1-lakh as an idea by Chairman Ratan Tata in 2003 was matched by automakers the world over. Maruti Suzuki, with a 50% market share in India, is uninterested to say the least in relinquishing the grip it has with its low end $5000 car. Meanwhile Ford, Volkswagen, Renault-Nissan and others are scrambling to set up shop in India's emerging market.

What does all this mean for US consumers. These large automakers will undoubtedly learn ways to cut costs to compete. Those lesson will likely lead to a trickle-up economic approach to cut costs on Domestic cars and presumably prices will follow. Don't hold your breath for a $3000 car here in the US though, the average domestic automobile has more than $2500 in safety equipment alone.

Sources:

http://www.blonnet.com/2007/03/07/stories/2007030706000100.htm

http://www.thehindubusinessline.com/2007/12/20/stories/2007122051640200.htm

http://www.nytimes.com/2007/10/12/business/worldbusiness/12cars.html?pagewanted=1

http://www.nytimes.com/2008/01/08/business/worldbusiness/08indiacar.html?_r=1&scp=2&sq=&oref=slogin
http://www.forbes.com/markets/2007/12/19/tata-budget-car-markets-equity-cx_rd_1219markets03.html