India's giant Tata Group is tomorrow unveiling the world's cheapest car, which analysts say could revolutionise prices worldwide.
Ratan Tata, the reclusive tycoon who heads the tea-to-steel conglomerate, will kick off an auto show here with the unveiling of the long-awaited 'People's Car', which will carry a sticker price of Rs 100,000 Indian Currency (IC) or $2,500.
The cheap car is a pet project of the Cornell-trained architect Ratan Tata, who helped design it, and is aimed at getting Indian families off their motorbikes and into cars. Ratan Tata has spearheaded the growth strategy of the company known for its philanthropic values. "I hope to make a contribution to making life safer for them the masses," he said.
Small cars are expected to dominate the biennial auto show, which has become one of Asia's largest and is expected to draw 1.5 million visitors, up from one million in 2006, organisers say.
"India's auto industry has found a new confidence — the show can be seen as the automotive industry coming of age," said Ravi Kant, president of the Society of Indian Automobiles (Siam).
Domestic and international carmakers have been in a race to corner India's small car market, which accounts for over two-thirds of domestic sales in the country of 1.1 billion people.
Small car sales are expected to nearly double to around two million units by 2010 as India's population becomes more affluent and trades up from motorcycles to cars.
The eight-day show features automakers from around the world from Honda, Ford, Hyundai and Volkswagen to luxury carmakers like BMW and Daimler, which are reaching out to India's new free-spending wealthy in an economy growing by nine per cent.
India's automotive industry, which produces 1.5 million vehicles annually, is worth $34 billion a year and contributes five per cent of the country's gross domestic product (GDP).
An Indian government mission plan aims for automotive sales to more than quadruple to $145 billion by 2016, and for indirect and direct auto sector employment to grow to 25 million from 13 million today.
The new car to be unveiled by the Tatas could 'revolutionise car costs downward,' said leading Indian car analyst Murad Ali Baig. "This car is bound to be followed by other low-cost ones. A lot of people just want a car that takes them from home to the market, they don't want something fancy or they want something small as a second car," he said.
Indian motorcycle maker Bajaj and France's Renault are looking at making a $3,000 car for the Indian market that would get 34-km per litre of fuel. Tata has said it is targeting its car at Indian and other emerging markets. The car would cost about half the price of its nearest rival in the Indian market made by Japanese-owned Maruti Suzuki that sells for $4,800.
A Tata Motors board member said the car would get 25-km per litre of fuel. Tata has said it believes it could eventually sell one million 'People's Cars' annually.
Tata, which has been on an aggressive overseas expansion drive, is also expected to win its reported two-billion-dollar bid for the British Land Rover and Jaguar brands in January — which would put it in the unusual position of making two prestige cars as well as the world's lowest-cost automobile.
Environmentalists see clouds on the horizon if the cheap car is a winner, fearing 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.
India's car market is a huge draw because car penetration is just seven per 1,000 people compared to 550 per 1,000 in such countries as Germany or 476 in France, said Dilip Chenoy, Siam director general.