In India, the world's cheapest car debuts to fanfare, criticism
Manufacturers take note of the $2,500 vehicle’s massive market, as environmentalists fear the effects of an automobile influx.
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Dubbed the 'People's Car,' the small vehicle will reportedly sell for 100,000 rupees (approximately US $2,500), less than half the cost of its closest competitor. With a 600cc motor capable of 58.8 miles per gallon of fuel, the rear-engine 4-seater will create little more pollution than a motorbike. The Wall Street Journal reports:
That should cheer environmentalists who loathe SUVs and other fuel-guzzling four-wheelers, as well as help consumers who currently can't afford a set of wheels.
But as the Tata model and a slew of low-cost imitators make cars more affordable, critics say the expected sharp increase in ownership will lead to an environmental and infrastructure disaster. The Observer reports:
"There is this mad rush towards lowering the prices to achieve mass affordability," said Anumita Roychoudhury, of the Centre for Science and Environment in Delhi. "If vehicle ownership increases very rapidly, we'll have a time bomb ticking away. When you lower the price that drastically, how will you be able to meet the safety and emissions standards? There are no clear answers yet."
Citing India's economic growth, which has averaged nearly nine percent over the past four years, The Economic Times, India's leading business publication, reports that India's rapidly growing middle-class has proven to be an attractive emerging market for automotive manufacturers, where car penetration is just seven vehicles per 1,000 people. According to The Economic Times:
An Indian government "Automotive Missions Plan" aims for automotive sales to more than quadruple to 145 billion dollars by 2016, and for indirect and direct auto sector employment to grow to 25 million from 13 million today … India's automotive industry, which produces 1.5 million vehicles annually, is worth 34 billion dollars a year and contributes five percent of India's gross domestic product.
Already, French automaker Renault SA and its Japanese partner, Nissan Motor Co., are trying to determine if they can sell a compact car for less than $3,000. Japan's Toyota Motor Corp., South Korea's Hyundai Motor Co. and Chinese automaker Chery also could be looking to make ultra-cheap cars in India, analysts say.