January 14, 2008
Small and cheap is the talk of Detroit
I am visiting Detroit for the motor show (or the North American International Auto Show, as we should call it)
The thing that impressed me most on the first media day yesterday, apart from the herd of cattle that Chrysler hired to amble down the road in front of the Cobo conference centre to mark its launch of the latest Dodge Ram pick-up truck, was that the most talked-about car was not actually on display.
Tata’s new small car for the Indian market, called the Nano, has intrigued lots of industry executives. It was even on the mind of my Nigerian-born taxi driver this evening. I know that quoting your taxi driver is one of the worst cliches in the journalist’s lexicon, but bear with me.
My taxi driver asked if I had heard of the Nano and then said he was so interested in the idea that he was planning to ask Tata if he could open a Nano dealership in Nigeria. His reasoning was that lots of people who he knows in Nigeria drive second-hand western cars and might be lured by the idea of being able to afford a new car.
Inside the conference centre, the attitude of auto company executives was more guarded. Takeo Fukui, the president of Honda, said his company was studying it but thought motorcycles, which Honda has been very successful at selling in emerging markets, would appeal to more people.
Rick Wagoner, General Motors’ chief executive, said his first impression of the Nano was that "it has tiny wheels". He argued that the Nano would not be much cheaper than GM’s own entry level small car in China and India, the Chevrolet Spark.
But Nick Reilly, head of Asia-Pacific for GM, was a bit more enthusiastic about his new rival, admitting that the Spark retails for the equivalent of about $4,000 in emerging markets, which is quite a bit more than the Nano. He said the Nano might create "a new floor" for cheap cars and encourage other auto companies to aim low.
Meanwhile, across the show floor, Smart was preparing to launch its Smart Fortwo car in the US this week. It is as small as the Nano and Smart hopes that it will find a place even even among the pick-up trucks and SUVs of the US market. It is aiming mainly for urban markets where parking spaces are scarce and people commute short distances.
But small is not Nano-style cheap. The Smart car will retail for $11,500 and up in the US, with the mid-range model selling for $13,500 - or just over five times the price of a Nano. Sizes of cars may be converging among different places in the world but prices are not necessarily following.
GM talks about a small $4-$5K car but they’ll blow it. The real secret to a cheap car is the ease of customizing it. Two guys with hand tools should be able to strip it down to the frame and rebuild it over three or four weekends. It needs to be able to mount several different engine sizes including one that would require the driver to be insane to actually let it out. It needs COOL after market stuff. Most buyers would never put a wrench to it, but it’s the difference between buying and driving a cheap car and buying and driving something with potential Cool.(real or imagined)
Posted by: Will Hutchins | January 16th, 2008 at 6:56 am | Report this comment