India’s giant Tata Group plans to launch the world’s cheapest car in a few days. The five-seater family car will cost about $2,400 new – less than R20 00 when converted into our currency.

New Tata will retail at approximately R16 400!

Ratan Tata, head of the tea-to-steel Tata conglomerate, will unveil the “People’s Car” on January 10 at a New Delhi auto show that will carry a sticker price of 100,000 rupees, or R16,400, which some analysts believe could revolutionise automobile costs worldwide.

“We have decided to locate this rather revolutionary plant, which we hope will give India its true ‘people’s car,’ in West Bengal,” Tata said at a press conference on Thursday. When asked how it was possible to manufacture a car that could be retailed at this price, Tata said he’s planning to use less steel and more plastic. Strong adhesives would also take the place of welding, he said.

Aims to bring safety to the masses

The cheap car, a pet project of Cornell-trained architect Tata, is intended to get India’s masses off their motorcycle and into cars.

“I hope to make a contribution to making life safer for the masses,” said reclusive tycoon Ratan Tata, who has led the growth strategy of a company known for its philanthropic values and paternal management style. “That’s what drove me – a man on a two-wheeler with a child standing in front, his wife sitting behind, add to that the wet roads – a family in potential danger,” Tata, who turned 70 on Friday, said on the company’s website.

Will compete with good used cars in this price range

But despite its low price and safety factors, analysts say the four-door, five-seater could be a tough sell for Tata’s vehicle arm, Tata Motors, even with an economy growing by a scorching nine percent, creating new affluence. If motorbike owners wanted to graduate to cars, there are a lot of good second-hand cars for 100 000 rupees or less, analysts say.

Fears for impact on environment

If the cheap car is a winner, environmentalists fear it will further congest India’s clogged roads and add to choking pollution. But Tata says the car will create no more pollution than a motorbike and is confident of its success. “We should be able to create a new market that does not exist,” said Ratan Tata, forecasting an annual market of a million cars.

May force cuts in new car prices

Total two-wheeler sales were nearly eight million last year while car sales were around one million, said Sachin Mathur, research head at leading Indian credit rating agency Crisil. “The cost of motorcycle ownership is three to four times lower than that for a car. That’s why you won’t see car sale volumes going from one million to eight million overnight,” he said. But a cheaper car “will provide some acceleration to market growth” at the same time as forcing other automakers to cut prices as well as produce cheaper cars, Mathur said.

Cheapest new cars available in South Africa

If you want to buy a new car in this country, there is nothing remotely similar, price-wise. The cheapest cars come in at between R60 000 and R70 000, with an R80 000-plus price tag if you want airconditioning, ABS braking and other safety features.

Chevy Spark 0.8 imageThe Chevrolet Spark 0.8 is the cheapest car on the South African road at present, and offers great value for its price of R65 900. You even get power steering, a security system and side impact bars in this little five-door hatch. You’re only getting a 0.8-litre engine though, so it’s pretty much a runaround for the city.

What is interesting to note though, is that this particular model has the same engine capacity as the proposed budget Tata release, but at almost four times the price.

Tata B-Line 1.4 photoTata produce the next cheapest in the South African five-door hatch segment and is the only car with a 1.4-litre engine for available for under R70 000. The B-Line 1.4 LE Tata retails for R68 995, and also offers a security system, power steering, side impact bars as well as remote side mirrors! A sound system is an option, but will cost you extra.

The new budget Tata still has to be seen (and driven) but its impending emergence on the motoring scene provokes some food for thought. Can a car be produced at such low cost and still offer a reasonable quality motoring experience? How will the new budget Tata compare to our ‘budget’ cars? And finally, does this then meant that we are paying too much for our cars in South Africa? We will have to wait and see…




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