The Economist on Chinese Cars

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An article from The Economist explaining why India might be ahead in the car innovation world, where as the Chinese are copying.

THE idea is not new. Making low-cost cars played a huge part in Europe’s economic surge during the 1960s—and created classic designs such as the Mini to boot. Now a new generation of ultra-low-cost cars could have an equally dramatic impact in Asia. For years, industry experts believed that such vehicles would emerge first in China, which is already the third-largest car market and the source of low-cost-everything-else. Yet the focus has now shifted to India, a country with terrible roads and a tenth of the inward manufacturing investment.

Last week the government of West Bengal approved the construction of a new factory at Singur, near Kolkata (Calcutta). In less than 18 months, if everything runs to plan, the first examples of a new low-cost car will leave the production line. The firm behind the project, Tata Motors—part of the Tata group, which is fighting with CSN of Brazil over Corus, an Anglo-Dutch steelmaker—has been in the car business for less than a decade. But the Tata group is revered in India for its ability to overcome seemingly impossible hurdles and it has formidable financial resources. Expectations are so high that other Indian states are bidding for future factories and international carmakers are lining up to co-operate with the venture.

The first trials of the new car took place last month at a test track in Pune, near Mumbai. It is not a cut-down version of an existing car, but is an entirely new design. With a rear-mounted 30bhp engine, four seats and a choice of four- and five-door models, it is a “good-looking car which is comfortable to drive,” according to Ravi Kant, the boss of Tata Motors. Most ambitious of all is the price. The car is known as the “one lakh” car—one lakh is 100,000 rupees, equivalent to around $2,100 when the car was first conceived four years ago. Material costs have since increased, but Tata still hopes the price will be less than $3,000 before tax.

For roughly $3,500 you can buy a Chery QQ 800cc model. I think I’d rather go with the Chery than the ‘Tata one lakh’ You can read the article in full on The Economist website