Ultra-Cheap Cars Are Coming – Even to the U.S.

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Arvind Yadav / Hindustan Times / Getty Images

Bajaj Auto launches new RE 60, which is expected to compete against the world's cheapest car - the Tata Nano, on January 3, 2012 in New Delhi, India.

The average price of a new car has been climbing for years. Thanks to technological advances, better gas mileage, new features for comfort and safety, and higher production costs due to wage increases, inflation, and a host of other reasons, a typical new car today is selling for over $2,000 more than a year ago. Even as the mid-market vehicle creeps upward in price, competition at the far low end is heating up, especially in developing countries: Some new cars are expected to sell for under $5,000.

Before getting your hopes up, it looks like the cheapest of the world’s cheap cars won’t be sold in the U.S. anytime soon. Not too far off in the future, though, American drivers may get to test-drive and buy a car with a sticker price under $10,000.

Here are three automakers making news with plans to dramatically reshape the low-price car market:

Datsun
Nissan recently announced (via the Wall Street Journal) that it plans on relaunching the Datsun brand with vehicles that cost in the neighborhood of $3,000 to $5,000. That’s for a brand new car. Mind you that the average price for a used car is close to $12,000 in the U.S.

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But the basement-priced Datsun won’t be available in the U.S. because the automaker’s “bare-bones approach to comfort and safety” won’t fly here, reports the WSJ:

For that reason—and because Nissan has no interest in cannibalizing its existing sales—the company says Datsun cars won’t be sold in the U.S. or other industrialized nations, at least not initially. In those markets, regulatory and safety issues alone would virtually eliminate the company’s super low-pricing strategy. “If you go to the U.S., it’s not going to end up being $3,000,” Mr. Ghosn said.

Instead, Datsun is targeting emerging markets such as China and India, where drivers are unlikely to mind standard-only transmissions and sticky accelerator pedals, so long as the price is right.

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Volkswagen
Word from Reuters is that Volkswagen is likewise interested in a large expansion into emerging markets, including China, Brazil, India, and Russia. The German automaker reportedly is looking into plans to create a budget car brand, with vehicles starting at around $6,500, in order to compete with Datsun and Renault’s low-cost Dacia models.

Volkswagen hasn’t announced anything officially with regards to the introduction of a new brand. But it has made ambitious growth plans public, including its goal to lead the world in total car sales by 2018. Strong sales in emerging markets would certainly help the cause.

Tata
The ultra-cheap Tata Nano—the no-frills $2,500 vehicle introduced in India in 2008—has failed to become a global hit thus far. Within three years, though, we may finally get to see whether American drivers will be interested in a “luxury” version of the bare-bones car.

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The Tata sold in the U.S., according to Automotive News, “will get a bigger engine and ‘more bells and whistles,’ including such features as power steering and traction control.” It’ll still be remarkably cheap by U.S. standards: MSRP is expected to start under $10,000.

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

10 comments
Autopten
Autopten

They are cheap, but they are still small cars, it is more than proven that Americans don't like small cars, so there is a little chance of success of these vehicle here in the country.

Obbop
Obbop

Buy a vehicle you can live in if economic calamity befalls you.

A long-wheel-base cargo-type van is the way to go since you do have to hide from the jack-booted-thugs who too-often view the down-and-out as undesirables; no matter how honest and moral they may be.

joeaverager
joeaverager

We bought a 25 mpg CR-V AWD 5MT in 1999 when other SUVs were getting 16-18 mpg. Still driving it at 242,000 miles too. The 'V keeps getting bigger and they no longer offer a manual transmission. Guess they don't want my business. Will be buying a VW Jetta Sportwagen TDI 6MT next time. 48 mpg on the highway and big enough to carry our family comfortably AND pull our Brenderup 1205S trailer (just like the CR-V does now). And before the VW horror stories begin I've owned a half dozen VWs and never had the kinds of problems other people relate.

When we bought the CR-V new gasoline was $1.65. Now it is ~$3.15. I expect during the ownership of the Jetta that gasoline and diesel will likely double if not more again. That good old free market capitalism that SwiftRightRight mentioned at work. I really don't want to buy something that gets 22mpg that I'll be wanting to sell once gasoline passes $4.50 per gallon in a few years and I surely don't want to be putting $7/gallon gasoline in anything that doesn't get mid-30s at worst. 

If only the Detroit products could be had with a TDI, a manual transmission and in wagon form - think Cruze, Focus/Fusion, or Chrysler 200 - I could buy an American product. I could buy a $50K Caddy but they only come with big V-8 engines - right? Oh WAIT - all three brands already have efficient wagons for sale in markets everywhere but the USA... Thanks Detroit. I don't want your SUVs. 

SwiftrightRight
SwiftrightRight

"higher production costs due to wage increases"

That's funny because when adjusted for inflation auto workers in America make less in 2012 then they have since the 1930's. I think what you mean is an increase in managerial overhead since the executives at every major automobile company are making historically huge wages.

sargeanthatred
sargeanthatred like.author.displayName 1 Like

Meh, I thought I'd be able to go to the Dollar Store and buy a car.  I'm disappoint.

GeraldFundy
GeraldFundy like.author.displayName like.author.displayName like.author.displayName 3 Like

Ill believe it when I see it. The big automotive companies will pay off all the politicians and lawmakers to ensure it never happens. Its the American way!

www.Tru-Anon.tk

TAZinTLH
TAZinTLH like.author.displayName 1 Like

@GeraldFundy   That was exactly what I was thinking.  The big car makers want to keep the prices up so that when they introduce theirs it is all we get to see.  And there are cars in Europe that get 78 mpg but they won't bring them here.  Wonder who is keeping those out?

SwiftrightRight
SwiftrightRight like.author.displayName 1 Like

@TAZinTLH @GeraldFundy The American people. There is a lot full of smart "egg" cars near where I work. The same cars sit there day in and out. Meanwhile the same dealership has a Dodge lot across the highway that blows through SUVs, Trucks and Chargers like you wouldn't believe.

I don't get it, I worked with a few pharmacists who were hard core teabaggers and they constantly cried about taxes and conspiracies while hurrahing unregulated capitalism. At the same time they just couldn't understand that unregulated capitalism was why it cost then 130$ twice a week to fuel up their Yukons, I guess its just easier to blame Obama..

KeithDPatch
KeithDPatch

Don't forget cheap battery electric vehicles! Alysha Webb's ChinaEV Blog discusses low-cost Chinese vehicles from Liuzhou Wuling Motors Co. that are coming to the US.

http://chinaev.wordpress.com/2012/11/06/u-s-dealers-to-sell-low-speed-evs-made-at-chinas-liuzhou-wuling-biz-model-may-work/

"The Eco brand products currently are the EcoVan, the EcoTruck, and the EcoE mini-car, three pure electric vehicles produced in China by Liuzhou Wuling. They range in price from $9,995 for the EcoE to $17,995 for the EcoVan. Target customers are municipalities, universities, medical schools and the like, all of which have large fleets of low-speed vehicles."

--Keith

http://blog.fuelcellnation.com