AFSCME 3357-HOF'S BLOG

$2,500 Automobile is Coming
And Al Gore must be Pissed

What will $5,000 buy these days? A pair of Tatas, Tata automobiles that is. India's Tata Motors will soon introduce a car designed for India's growing middle class that is intended to seat four and sell for about $2,500.00. The New York Times (free registration required) has posted the most detailed story on the new "peoples' car". For $2,500 there's a lot you don't get. There's no radio. There's only one windshield wiper. The car only has a 600cc, 35-horsepower engine, and it isn't designed for sustained speeds over 45 mph.

Right now, India only has 8 cars for every 1000 people. An affordable car targeted at India's growing middle class could result in an explosion in the number of vehicles on the (already congested) roads. India isn't known for enforcing current emission laws, and even though Tata claims the new care will be among the cleanest emissions in the world, the cars will probably get dirtier as they age. The new Tata will likely be exported all over the developing world.

Although he hasn't commented on it, it's likely that Al Gore is not happy about all of this. Every new car added in a 2nd or 3rd world country adds to the carbon loading of the planet. Growth outside of the US can easily exceed U.S. consumers' ability and/or willingness to cut consumption. And yet, it's hard to criticize Indian consumers, when all they want is a fraction of the comforts that we take for granted.

There are lots of other players going for this same market, and combined they will be ready, willing and able to expand auto production in India by millions of units per year. The first is Bajaj, India's second largest motorcycle maker. Bajaj is teaming with Renault/Nissan to to build its own sub $3000 car. Ford announced plans to invest $875 million in a new assembly plant in India. (Where it will get the money is anybody's guess.) Finally, Volkswagen is planning on selling 110,000 more cars per year in India as well.

The next time you see an automaker brag about its plans to cut emissions of its vehicles by 20% over 20 years, ask them how many additional cars they expect to sell overseas. If they don't cut their emissions sufficiently to make up for product growth, then they aren't really serious about global warming. And yes, Toyota, I'm talking about you too.