Friday, October 31, 2014

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN




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India, China Leading Global Path In Small Car Automotive Design – Recyclable cars a new economic model for global auto industry

Both China and India are leading the way forward for global vehicle trends as Tata’s Nano has stunned the U.S. car manufacturing market in it’s simplicity and low cost. The increasing rising of gas prices is having three effects, both of which China and India have long foreseen the need for smaller cars, a fundamentally different financial production model than the current one used for auto manufacture, and the trend ultimately to electric powered clean emission vehicles.

While the U.S. market is not planned for market entry by Tata, many industry experts believe that the way forward will be vehicles of the Nano type. The disposable culture of the United State fits that of the cheap US$2,500 Nano. With no need to spend much on repairs or maintenance, you just buy a new one when the need arises. The Nano is already mostly made from recyclable materials, and with it’s manufacturer, Tata also owning many recycling plants in India, thus creating an entirely new economic model for vehicle production. This financial model is completely different of anything American, European and Japanese manufacturers have previously considered.

Forecasts for small car purchases are set to rocket by 65 percent in the next four years, and by 50 percent in Western Europe. Even the conservative US, lovers of big auto statements, are anticipating a growth of 25 percent in the category.

Auto analyst John Wolkonowicz stated “The Nano is the price of a small laptop computer, and is the 21st century equivalent of the Model T Ford. It is going to mobilize the third world and that will have implications for everyone.”

Renault have also commented, “We’re very bullish on smaller cars, even at USD3,000. We have signed a deal with Bajaj in India, who have previously only made motorbikes and 3-wheelers, to develop a competitor to the Nano. We do not intend selling it in Japan or France, but in developing markets. Even GM cannot make money selling cars in the US, their income now is driven by small car sales overseas. The economic model of the Nano looks like the way forward for the global industry; Tata have revolutionized how to build a car.”

The U.S. appears to be listening. Chrysler have announced they could develop a Nano type vehicle with Wuling of China, whose popular minivan sold nearly 500,000 units in 2007 and which weighs just 20 percent more than the Nano. GM are following with a USD6,000 price targeted new car.

Europe is also following, Fiat has relaunched a new version of it’s classic Cinquecento (Fiat 500) and Peugeot has developed the tiny 107 city car with Toyota.

China also is upping the ante by concentrating it’s R&D on electric cars. Miles is a Canadian sold vehicle partially manufactured in China that will achieve 64 kph, and with a battery life of 64km per charge. India isn’t far behind again, with the Reva Electric Car of Bangalore stating. These cars deliver people mobility, ease of driving and cost. They are not designed to drive from Los Angeles to San Francisco.

Electric cars could also actually benefit in terms of licensing, as a lower speed and lower carbon footprint becomes advantageous for governments and insurance companies alike. Auto demographics are changing as well. Urban drivers simply do not need to go very far or very fast.

The Nano is here, and with China and India jointly at the forefront of small auto technology, it’ll be Asian technology, developed through an understanding of developing market technologies that will shape the entire nature of the existing global auto industry.

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3 Responses to India, China Leading Global Path In Small Car Automotive Design – Recyclable cars a new economic model for global auto industry

  1. Pffefer says:

    Smaller, more gas-efficient and more environmentally-friendly is definitely the right direction, but getting cheaper is not. Getting it on cheap means cutting corners, possibly. When people buy a car, the numero uno thing is safety. Are these small cars safe enough? Is Nano safe with all the plastic parts?

  2. Chris Devonshire-Ellis says:

    The jury appears out on that one, although Ratan Tata did state the most difficult thing to accomplish for the Nano was to pass the safety tests for cars as laid down by Indian law. But – it passed. It’s up to auto and government regulatory bodies to set standards. You have to remember also you’re not going to be doing a ton down a motorway in these things, they’re designed for urban driving in big cities. The average speed in London now is slower than it was when it was all horse powered and the average pace in cities like Mumbai is less than 15mph.

  3. Pffefer says:

    We shall see how SMART turns out here.

Comments are closed.



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