FUTURISTIC GROOVES

The moment has finally come. Today Tata has unveiled the world’s cheapest motor car. Tata’s stripped-down motor car will cost you around US$2,500 (100,000 Rupees), and it’s aimed at the company’s home market of India. But its popularity need not stop there.

This is not only a breakthrough from a price point perspective. It basically puts a car into the reach of people that previously only could dream of owning a scooter or moped. Nevertheless there are still billions of people who cannot afford an investment of $2500,-. In essence this is a car aimed at the world’s middle class. There are hundreds of millions of people who will be able to afford the People’s Car - in China, in Vietnam, in Pakistan, in coastal Africa…. They’ll buy, as long as the quality is reasonable and the car doesn’t become a laughingstock, like the old Yugo.

Furthermore, in affect, the People’s car will also change the competitive dynamics of the entire auto landscape. Everyone except the luxury car makers might want to think about entering this uncontested market segment. If Tata can sell a good product for US$2,500, then it will be able to keep moving its consumers up the economic motor car ladder, to a US$5,000 car, and then a US$10,000 car. When you consider a growing market of hundreds of millions worldwide, a little brand loyalty could go a long way.

Updated @ Jan 11th.: Interested in the applied cost-cutting tricks please follow this link.

Source BBC News & IHT.