Nano Cars, Micro Prices: The Low-Cost Car Trend

On June 4, we blogged about automakers thinking “small,” and a year ago, GSI staff mentioned that low-cost cars would be a trend of the future. Now, the low-cost car trend is upon us, and manufacturers are pushing their limits to produce reliable vehicles at tiny prices. Tata’s Nano, set to release in October, has set the bar as low as $2,400. This “people’s car” has caught the attention of automobile manufacturers around the world. With a rising low-cost car market, expected to grow 4.1% globally between 2006 and 2012, the competition to capitalize on the up-and-coming market is in full swing, explains BusinessWeek:

“Renault-Nissan is the first global automaker to take up the gauntlet thrown down in 2003 by India's Tata Motors... Both are leading a race to the bottom that could affect the business every bit as much as Henry Ford's Model T did a century ago.”

Befittingly, Ford is celebrating the 100 year anniversary of its Model T by hosting an international contest to “develop a car that is simple, lightweight, practical and priced below $7,000.” Elsewhere in the U.S., some consumers are taking advantage of the plummeting prices of old cars and SUVs.

The long-term repercussions of a low-cost automobile market could be harmful. As millions of people are able to afford a vehicle for the first time, the emissions of even increasingly efficient vehicles will amass to a hefty carbon price tag. Furthermore, in states where the market is expected to grow the most, the infrastructure is dubiously prepared for the surge of first-time motorists.