low cost cars – the global challenge

I found this interesting Business Week article on the development of really cheap cars by chance, but it raises some fundamental questions, albeit from an American perspective:

Link

Some further thoughts:

  • the comparison with no frill airlines and cheap clothes retailers (H&M, etc) is right in this context – if the western consumers can go low cost the emerging markets can start at low cost and the global market for very cheap products increases
  • Imagine a $2,500 (£1,250) car’s impact on developing countries traffic levels, when India and China’s emerging middle and upper working class can join in (or as the article suggests we are already seeing a $7,000 car impacting on poorer populations in eastern Europe and increasingly on the west…like the Dacia/Renaut Logan)
  • You can hear the complaint from the emerging nations – “why shouldn’t we have personal individual mobility like you have had for the last 100 years, to cover for your guilt about environmental damage and climate change” (Thanks, Gottfried Daimler, btw)
  • From my personal perspective I muse – what does this do to the motorcycle and scooter market – will Japanese, Korean, even the Chinese and Indian manufacturers who are currently growing, go the way of Triumph, BSA, Ariel – all world dominating businesses when a motorcycle was the first step on the mobility ladder. Better go for plan b, Honda… and dont even start to think about what China’s bicycle manufacturers will turn to next (the usual reference point in discussions about developing countries and cars)
  • I recall a similar article in Car magazine some 15 years ago and its predictions certainly came true – your European car is likely to be assembled anywhere labour is cheap (uh…Derby, Sunderland, Swindon? OK, but point taken) out of bits from Brazil, Indonesia and for all I know Chad, and finally discounted to get the metal out of the the fields near the ports and onto your drive
  • can a developing world cheap car achieve the same role in society again as the original VW, Fiat Cinquecento, Citroen 2CV or even Mini – and will these new ugly boxes on wheels become anti-fashion statements – they may become the first teenage car of choice for cash strapped parents, but I can’t see the Chery, Geely, Great Wall Motor, Nanjing, Hafei, Zhongxing, or Brilliance China (all rising Chinese brands) capturing the Fiesta, Saxo or Corsa market.
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