Wednesday, January 16, 2008


DETROIT — The most talked-about car at the Detroit auto show is a car that isn't here, and isn't intended to ever be sold in U.S. showrooms.
It's the Tata Nano, a car that will cost just $2,500 and was unveiled last week at a car show in India. The bare-bones vehicle is meant not as an aspirational car but as a safer replacement for mopeds, which can even be seen carrying small families around neighborhoods in India.Some say the Nano could be a revolutionary car that could change the developing world.Even if it runs on just 7-inch wheels.
The Nano could repeat what automakers in the past — like Ford (F) with its Model T and Volkswagen with the Beetle — did successfully: Build a car that the masses can afford to buy."Cars like that could be the new Volkswagen," says Ken DeWoskin, a consultant at PricewaterhouseCoopers' Detroit office. "They could have a huge impact on the world."The Nano came up in conversations all over the North American International Auto Show here, and there were even rumors that it was on display in a small showroom in the basement of Cobo Hall, the area where the Chinese automakers and specialty carmakers have their stands.The big automakers are taking notice.
"They are going to create a whole new market," says John Parker, executive vice president for Asia Pacific and Africa for Ford Motor. "It's a different mindset, a different attitude. They're going to break through the paradigms."

Rick Wagoner, CEO of General Motors, (GM) says he's being careful not to dismiss the car simply because it is cheap and minimalist.

"In the developed world, we kind of miss the point," he says. "We think, 'How would that car do in a crash test?' But we miss the point that it's better than being in a crash in a two-wheeler."

As Tata Motors chief Ratan Tata explained in a press release last week: "I observed families riding on two-wheelers — the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family."

Despite the show chatter, a car like the Nano likely won't be sold here any time soon. Stricter U.S. safety and emissions standards would drive up the price.

"I don't think in America there is an appetite for that kind of vehicle," Ford's Parker says. But in India, "If somebody's offering a vehicle that's a little more safe, even if it doesn't meet all of our first-world requirements, it could do well."

Nissan and its partner Renault say they have plans for a $3,000 car. They are the only full-line manufacturers now aiming for the bottom end of the market. The car would be for the booming Indian market first and eventually would be considered for the U.S. market, according to Carlos Tavares, executive vice president of Nissan Motor.

Even if they have to double the price to meet U.S. regulations, Carlos Ghosn, CEO of Nissan and Renault, said it would still be the cheapest new automobile on the market.

Small cars are becoming more and more popular in the USA, with an emphasis on fuel efficiency. With the Nano, it's all about price.

Would it sell here? Says Kevin Smith, editorial director for "When I hear myself say that it's something that wouldn't sell here, I say wait a minute. With $3 gasoline heading for $4-a-gallon gasoline, all of the sudden it's not as ridiculous as it seemed."

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