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India Set to Introduce World's Cheapest Car


An Indian car maker is getting set to roll out a car next year aimed at those on the lower end of the country's economy. It is expected to extend the dream of car ownership to millions of Indians. Raymond Thibodeaux filed this report from Kochi in India's southwestern Kerala State.

Many Indians predict the country's already jammed streets are going to get even more clogged next year when one of India's top car makers, Tata Motors, rolls out the world's cheapest car. The sticker price? 100,000 rupees, or one lakh in Indian currency. That's about $2,500, half the price of the lowest-priced cars on India's market today.

Still, the one-lakh car - Tata has yet to release its official name - is nearly three times the average per capita income in India.

Only eight in every 1,000 Indians own a car, compared with roughly 500 Europeans out of every 1,000 and 770 Americans. The vast majority of Indians get around on motorcycles or mopeds, or foot.

Sudheer Mahanan, a 42-year-old forestry warden, often carries two passengers on his moped, his 11-year-old son and his five-year-old daughter. Every day he takes them home from school on his moped.

Tata is targeting its one-lakh car at families like Mahanan's, in India's vast lower-middle class.

But Mahanan says the price is still too high for him. He says he has taken this two-wheeler with financial support from the bank. So he will not be able to take a car that is costing one lakh rupees."

How cheap would a car need to be in order for him to buy one?

"50-thousand rupees," says Mahanan. He says if there is a car of that sort that you are able to make, then he is very happy to buy it.

That is just over $1,000. So, that car is not likely to be on the market anytime soon.

In Kerala, car sales are booming. In cities such as Trivandrum and Kochi, the brisk trade is being helped along by a robust tourism sector and a growing technology industry.

That growth is seen in much of India, which has one of the world's fastest-growing economies.

Azad Pathan owns a Tata dealership along a stretch of road in Trivandrum with about a dozen car dealerships, with gleaming showrooms filled with cars.

Pathan seems to have doubts about whether Tata will actually pull off the one-lakh car.

"It is definitely going to revolutionize," he said. "But I don't know whether it is possible to make such a car. Ratan Tata, who is the chairman, is a man with a big vision."

Tata has not divulged many details about the one-lakh car. Supposedly, it will be small, four or five-seat compact, much of it will be plastic, and it will have a tiny 30-horsepower engine.

If the one-lakh car is successful, it is expected to boost sales in spin-off industries such as car parts and auto repairs.

Saji Kumar manages the Pradeep Driving School in Kochi.

"There are people coming to learn driving, but there is not any drastic increase," he said. "Once they know that there will be a one lakh rupees car, then there will be more people coming to learn driving."

Tata is counting on the one-lakh car to be a hit. The car maker is banking on huge sales volume to make up for the car's tiny profit margin.

But its success could spell trouble for India's urban planners and environmentalists. They say a significant increase in car ownership could overwhelm the country's beleaguered roadways and worsen its air quality, which the World Bank says is already at "critical levels" in most of India's big cities.

Environmental groups also express great concern that bringing car ownership to India's masses - who represent about 17 percent of the world's population - would inevitably enlarge India's carbon footprint - its gas emissions from burning fossil fuels such as oil and coal. At the moment, India contributes only four percent of the world's carbon dioxide emissions, which many scientists say may contribute to global climate change. That level is tiny compared with the U.S. and Europe, and environmentalists want to keep it that way.

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