For most of us, it is almost impossible to drive down the street alone. There always seems to be some ancient fossil driving in front of us, and the neighborhood redneck in his lifted super truck right behind. The reason is overpopulation, and there are now 6.7 billion people in the world, and almost 1 billion cars. Given this many people, most would ask, “Why are the world’s automakers not swimming in money?” Common sense would say that if there were 5.7 billion people without cars, and another billion that will need to replace the crappy cars they have, then the automakers should be so rich that they are coating their private tax havens in antihydrogen ($1,750 trillion dollars per ounce – Isn’t Google wonderful?).
You see, auto executives are not the brightest little bulbs on the Christmas tree. In fact, they are not even as smart as the Sham-Wow guy. Yes, both spend their nights beating up hookers, but more importantly, the executives insist on selling cars that are too expensive for most people, while the Slap-Chop guy sells cheap crap to everyone. Volume is the key to the future.
This brings me to some trivia: Of the two cars shown below, which is the bestselling car in America, selling over 457,000 units? Which car outsold the Honda Accord and Toyota Camry, with over 10 million cars sold since its launch in 1979? Which car is in the top 20 most popular cars ever produced? Wrong! The answer is the Little Tikes Cozy Coupe, which sells for 50 bucks.
Why would I give you these insignificant details? Because the cheapest car always sells the most and because it’s funny how much alike they are. One of them (I am not sure which) is the Tata Nano, the cheapest car in the world, and the other is a children’s toy. The Nano is a miniscule car, based on the Little Tikes Cozy Coupe that most children have, and sells for $2,200 dollars. This car was supposed to change the world, and may still, if they ever fix the niggly little problem of its spontaneous combustion. One of these two vehicles is the future of the automobile industry.
Tata is not the only one making cheap cars. Now, Renault-Nissan is getting into the fray, with a model that will sell for $2,500 dollars. Renault already has a runaway hit with the stripped Logan sedan, which sells for $7,200 dollars. Over 450,000 Logan sedans have sold in 51 countries, and their plants are working round the clock to meet the demand. There is a race to the bottom of the price pyramid that will affect the business every bit as much as Henry Ford’s Model T did a century ago.
Granted, the Tata is not the best car ever made, with its 33 horsepower engine and dinner plate wheels. However, Tata is expecting to introduce them to the US market in 2012, and expect sales to be “brisk.” Tata is also aiming their sites on the billions of customers in China, India, Brazil, and Russia. With that many potential customers, they could sell a lot of cars.
Within a few years, companies like Volkswagen, Peugeot, and Fiat will also start selling in this market, and with some help from Geely, maybe even Chrysler. Car makers should be rolling in money, all they have to do is start selling cars like the Cozy Coupe.
Article by Chris Raymond
Photos courtesy of Google Images, Car Review, Tata Motors, Motor Beam.cm, and Business Week