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Everyone's planning a low-cost car!

Jul 6, 2007
Almost a century after Henry Ford took the world by a storm with his Model T car in 1908, Ratan Tata plans to launch his Rs 100,000 ($2,400) car, making it the cheapest in the world.

But Tata is not the only one who dreams of making a four-wheeler affordable for common folk. Emboldened by a booming auto sector, rising incomes, easy loans, and a huge middle class in India, many local and global car makers are planning to launch super low-cost cars in India.

Everyone wants a piece of the action. Bajaj, Mahindra & Mahindra, Xenitis. . . Even Honda, Toyota and General Motors plan to launch cars priced below Rs 500,000 (about $12,000).

Yet, even as Tata Motors, Bajaj Auto, the Mahindra & Mahindra-Renault combine, and Xenitis subsidiary Global Automobiles and China's Guangzhou Motors plan cheap cars for India, a section of the masses doesn't seem too happy with the idea.

Some pockets believe that Indian roads are already heavily congested with nightmarish traffic, and the launch of low-cost cheap cars -- that may well replace thousands of two-wheelers -- will only add to the agony of the commuters. Planners and environmentalists also fret over what the sudden increase in cars would do the levels of pollution.

Yet, a majority of Indians are overjoyed by the idea of owning a car that is affordable.

And no one is more excited than car makers. After all, it's a colossal market that beckons them. Only 8 in every 1000 Indians have a car. Small cars make up almost 70 per cent of all the cars sold in India. Small car makers get tax benefits. And Indians' are now slowly wanting to spend a little more on luxury and status.

India, it seems, is on the verge of becoming the global hub for the production of small, cheap cars, with its low-cost labour, talented engineers, and a thriving auto spare parts markets.

This might well be a wake-up call for Maruti Udyog, India's largest car company, which pooh-poohs Tata's plan to launch a Rs 1-lakh car, saying it cannot be done. But Tata might yet prove everyone wrong.

So what's in store for the Indian automobile sector in the coming years? Here's a look at the low-cost cars that various car makers are planning to launch in the Indian market. . .
Text: Rediff Business Desk
Sketches: Uttam Ghosh

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