Under $3000: The Race To Build Really Cheap Cars

Renault-Nissan is planning on building a car for under $3000. The price could be as low as $2500, which is 40% less than the least expensive sub-compact car available today. The Chief Executive of the company, Carlos Ghosn, made this announcement at a plant-opening on April 4. An Indian carmaker, Tata Motors, plans to launch a $2500 car next year. This race for the really ceap car could have a major impact on the industry as a whole.

Despite being priced under $3000, these car will be designed to be comfortable and safe. They will also be engineered from the ground up — stripped-down versions of outdated designs won't cut it. Tata's model is a four door vehicle with a 33-horsepower engine, and a top speed of around 80 mph. The automaker claims it will even pass a crash test. Whatever the lowest sticker price turns out to be, the discounting trend will hit cars across the board, from minis to SUVs.

The market for these cars is huge. According to Business Week:

There's no lack of potential customers: Hundreds of millions of Chinese, Indians, Brazilians, Russians, and others will likely join the middle class in the coming decade, and cars are sure to be at the top of their shopping lists. As a result, the global car market is polarizing: The luxury segment continues to grow, cheap cars boom, and everything else gets squeezed. By 2012, the market for vehicles priced under $10,000 is likely to reach 18 million cars, or a fifth of world auto sales, according to Roland Berger Strategy Consultants. That's up from 12 million today.

I'm sure these small, inexpensive cars get many miles per gallon. I wonder if any of the carmakers will be considering biofuel or plug-in electric models.

:: Via Business Week