The “Chinese car” turned out to be Indian

In June 2003, I wrote “The Chinese Car”, asking what would happen to the U.S. economy when a perfectly functional car could be purchased for between $2000 and $3000. The posting predicted that we’d have our inexpensive car some time between 2013 and 2023. It looks as though 2013 is more likely than 2023 and that India will be the source rather than China. See and . Tata has delivered the Nano, for $2200, and only six months late, despite having had to relocate its factory.

[The cheapest Chinese cars right now sell for about $5000.]

8 thoughts on “The “Chinese car” turned out to be Indian

  1. It’s going to take a lot of new taxes to cover GM’s loss over this. Better cancel some vacations.

  2. How many extra thousands of dollars in cost would it take to make it comply with regs to be “street legal” in the US?

  3. CK: It might not cost significantly more to comply with US regulations. The car already has crumple zones. To be sold in the U.S., a car is not required to protect its occupants in the event that a teenager in a 7000 lb. SUV crashes into the side at 70 mph. If that were the case, it would be impossible for any of the current compact cars to be marketed. As for emissions, the Nano already has a very small engine. It should be easier to make a small engine meet a fixed emissions limit than a large engine.

    We assume that cars have to be massive and expensive because they’ve been built more or less the same way since the 1930s. An engineering team that went back to first principles might not design anything like the Chevy Malibu or Toyota Camry.

  4. Phil wrote: “It might not cost significantly more to comply with US regulations.”

    If it doesn’t cost a lot to comply with US regulations, then US regulations will be changed. Some property that current cars have and the itty bitty car lacks will become mandatory. That’s how regulatory capture works.

  5. Don’t forget to credit the media-savvy Tartar company. Equally usable Chinese cars were pretty much chased off the foreign markets by concerted efforts of the domestic brands, in collusion with the various safety regulatory bodies and a small army of paid-off reporters in car rags.

    Chinese cars got such biased treatment during safety tests and slanderous reporting overseas that most Chinese car makers are content at cultivating the domestic automobile market, which this year should be second only in size to that of the US. It will take much much longer for Chinese cars to take hold in the world market than it took by the Japanese and Korean automakers.

  6. George: I’m not sure that government is quite as nimble as you suppose. Tata has shown itself able to build a factory from scratch and then move it to a new region of India. Short of an old-school tariff on cars under a certain weight or made in India, I don’t see what the U.S. government could do. By the time the Nano arrives on our shores the Detroit automakers may not have a significant market share. Congress may not be that interested in protecting Honda, Toyota, and Nissan.

    Marvin: The cheapest Chinese cars are around $5000 in the local market, as I understand it (from the “paid-off reporters that you cite). That’s not a very interesting story, as by the time they land in the U.S. they will cost $8000 or $10,000 (not too different from the cheapest Korean-made cars, e.g., the Kia). For a purchase of that size, an American will still have to obtain financing, collision insurance, and all of the rest of the machinery that goes with an expensive purchase. Tata did not need to be media-savvy to get coverage for rethinking the four-seat car and bringing it to market for $2000. That is news by anybody’s standards.

  7. Phil: Tata manipulated the media to conveniently ignore the dismal safety provisions offered by these $2k cars (while saying the $5K Chinese cars were the “worst ever tested” etc. in terms of safety according to Euro NCAP). BTW, a correction: sales in the Chinese automobile market has surpassed US in both January and February this year. GM is doing fabulously in China.

  8. Marvin: I’m not sure what safety provisions are offered by the Nano. There are plenty of lightweight racing cars that lack airbags (like the Nano) yet have superb crash protection. In any case, at $2000 the only comparable transportation product available here in the U.S. would be a bicycle. I think it is fair to say that the Nano offers more crash protection than a 20 lb. road bike.

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