Flint’s not buying it
Jerry Flint, auto editor for Forbes magazine and commentator on the auto industry, doesn’t believe that there is ever going to be a $2,500 car, whether it’s ostensibly to be made in India by Tata or anywhere else by anyone else.
Flint believes that the Chinese are currently the lowest cost automobile producer in the world. They haven’t developed a $2,500 car. If they haven’t done it, then no one else is going to be able to do it because the Chinese have had enormous amounts of technical assistance over the last number of years by very technically advanced Western car companies.
Also, Flint points out that the notion that the Indan producers can meet that price by developing new manufacturing methods is similarly bogus. There is no revolution in the offing in auto manufacturing. In fact, the Western and Japanese manufacturers are the most technologically advanced auto producers in the world. If there was something new to discovery, they would have discovered it.
Besides, the companies in India haven’t succeeded in producing even cheap motor scooters. The cheapest scooters in India cost $1000 and have no seats, doors, etc. Further, though India is developing, it is still fundamentally a poor country, with 30% of its 1.1 billion people living “abject poverty,” as Flint puts it. And, it takes roads to develop an automobile market. India doesn’t have very many of those.
Flint calls the $2,500 Indian car a “fantasy,” and predicts it will never be built.
So, is Flint right? He’s generally a pretty astute observer. Tata’s president backed off of the $2,500 price tag recently, stating that the car being developed would be closer to $3,000. But hitting the $2,500 price point could be critical for Tata, which has made its mark building trucks. Suzuki owns over a third of the Indian market, with cars in the $5,000 price range.
Tata has succeeded at most things it has tried, but it has always had the benefit of Indian legal rules that protected it from foreign competition. Were it to build the car it claims to be developing, however, it would be seeking to sell that car in other countries as well, and would have to build a structure in each of those countries to market and service the vehicle.
Maybe Flint will turn out to be right.