Filed under: Autoline on Autoblog
Autoline on Autoblog with John McElroy
by John Neff on Sep 20th 2007 at 2:00PM 
John McElroy is host of the TV program "Autoline Detroit". Every week he'll bring his unique insights as an auto industry insider to Autoblog readers.
CHEAP CARS COULD BE BIG BONANZA
By John McElroy
At the Frankfurt Auto Show last week, I found myself going through the Dacia Logan with a fine-tooth comb. I slammed the doors, sat in the seats, ran my hand over the fabrics, checked the fit and finish, and lay on my back peering under the car. Then I stood back and looked at it from a variety of angles. I just had to find out for myself if this cheap car truly represents the next Big Thing in the automotive market.
In case you haven't heard of it before, here's the quick low-down on the Logan. Dacia is a Romanian automaker now owned by Renault. Together they came out with the Logan to provide a low-cost, yet modern automobile for the masses. Today, the Logan is about the cheapest car you can buy in Europe. There's a van version that starts at 5,600 euros ($7,800) and a sedan that starts at 6,400 euros ($8,900).
At first, most other automakers sort of scoffed at the effort. But then sales of the Logan took off. Right now they're running at about 200,000 units a year and it's exported to 50 countries. That made everyone in the industry sit up and take notice.
As all this was going on, reports started coming out of India that its main automaker, Tata, was exploring how to come out with a car that only costs $2,500. At first, I had to laugh at the idea. A modern engine, meeting all the U.S. emission standards, costs more to make than that!
But I'm not laughing anymore. And neither is anyone else in the industry. There's a growing realization that cheap cars could become a huge segment, particularly in the booming economies of the emerging markets. That's why Toyota, GM, and the rest of them are now working on their own versions.
In the United States today the cheapest car you can buy is about $10,000. It's hard for automakers to sell a car for anything less than that because we have the toughest safety and emission standards in the world. It takes more structure to meet the safety standards, and expensive technology to meet the emission ones. On top of that, most Americans insist on buying cars with automatic transmissions, air conditioning, power windows, and CD/MP3 players. And that has driven a mindset that says, "Cheap cars don't sell."
But now that designers and engineers are studying this segment more intently, they're starting to come up with ideas on how to make a good, yet inexpensive car. Even the automotive suppliers are getting in on the act. Continental, the big German supplier, says it's working on low cost versions of anti-lock brakes, and electronic stability control for these cheap cars. Borg-Warner is working on a new type of low-cost automatic transmission. They believe third world buyers will want access to the latest technology, even if it is a low-tech version.
If the Logan is indicative of what these cars will look like, nobody over here has to worry about them. It looks like a collection of cheap parts that were assembled into an automobile, with little regard for aesthetics.
If, however, some clever designers put together a good-looking car that is inexpensively made, yet offers low-tech versions of all the amenities-watch out! They could even catch on over here, especially if some consumers decide they can easily live with a car that only gets, say, a 3-star crash rating.
And therein lies the moral and legal dilemma that the car companies will face. Should they be selling cars that are not "as good" as they can make them, simply to be able to sell them at a lower price so more people can afford them? Or should they take advantage of what could become the next big segment in the market?
Me? I say run 'em down the assembly lines!
Airs every Sunday at 7:00AM on Speed and 10:30AM on Detroit Public Television
Synopsis of next week's show - "The New Journalism"
Of course equating the Internet phenomenon "blogging" with the profession of journalism would probably have Joseph Pulitzer rolling around in his grave. But there's no denying that the "web log" or "blog" -- as it's come to be known -- has shaken the foundation of 21st Century information; the way it's delivered and who does it. It truly is today's new frontier that has touched virtually every sector of society, and it's not going away.
Guests - Ed Garsten - Chrysler, Scott Burgess - The Detroit News, John Neff - Autoblog.com
Last week's show - "manu factura"
Autoline Detroit Podcast
Click here to subscribe in iTunes
CHEAP CARS COULD BE BIG BONANZA
By John McElroy
At the Frankfurt Auto Show last week, I found myself going through the Dacia Logan with a fine-tooth comb. I slammed the doors, sat in the seats, ran my hand over the fabrics, checked the fit and finish, and lay on my back peering under the car. Then I stood back and looked at it from a variety of angles. I just had to find out for myself if this cheap car truly represents the next Big Thing in the automotive market.In case you haven't heard of it before, here's the quick low-down on the Logan. Dacia is a Romanian automaker now owned by Renault. Together they came out with the Logan to provide a low-cost, yet modern automobile for the masses. Today, the Logan is about the cheapest car you can buy in Europe. There's a van version that starts at 5,600 euros ($7,800) and a sedan that starts at 6,400 euros ($8,900).
At first, most other automakers sort of scoffed at the effort. But then sales of the Logan took off. Right now they're running at about 200,000 units a year and it's exported to 50 countries. That made everyone in the industry sit up and take notice.
As all this was going on, reports started coming out of India that its main automaker, Tata, was exploring how to come out with a car that only costs $2,500. At first, I had to laugh at the idea. A modern engine, meeting all the U.S. emission standards, costs more to make than that!
But I'm not laughing anymore. And neither is anyone else in the industry. There's a growing realization that cheap cars could become a huge segment, particularly in the booming economies of the emerging markets. That's why Toyota, GM, and the rest of them are now working on their own versions.
In the United States today the cheapest car you can buy is about $10,000. It's hard for automakers to sell a car for anything less than that because we have the toughest safety and emission standards in the world. It takes more structure to meet the safety standards, and expensive technology to meet the emission ones. On top of that, most Americans insist on buying cars with automatic transmissions, air conditioning, power windows, and CD/MP3 players. And that has driven a mindset that says, "Cheap cars don't sell."
But now that designers and engineers are studying this segment more intently, they're starting to come up with ideas on how to make a good, yet inexpensive car. Even the automotive suppliers are getting in on the act. Continental, the big German supplier, says it's working on low cost versions of anti-lock brakes, and electronic stability control for these cheap cars. Borg-Warner is working on a new type of low-cost automatic transmission. They believe third world buyers will want access to the latest technology, even if it is a low-tech version.
If the Logan is indicative of what these cars will look like, nobody over here has to worry about them. It looks like a collection of cheap parts that were assembled into an automobile, with little regard for aesthetics.
If, however, some clever designers put together a good-looking car that is inexpensively made, yet offers low-tech versions of all the amenities-watch out! They could even catch on over here, especially if some consumers decide they can easily live with a car that only gets, say, a 3-star crash rating.
And therein lies the moral and legal dilemma that the car companies will face. Should they be selling cars that are not "as good" as they can make them, simply to be able to sell them at a lower price so more people can afford them? Or should they take advantage of what could become the next big segment in the market?
Me? I say run 'em down the assembly lines!
###
Autoline DetroitAirs every Sunday at 7:00AM on Speed and 10:30AM on Detroit Public Television
Synopsis of next week's show - "The New Journalism"
Of course equating the Internet phenomenon "blogging" with the profession of journalism would probably have Joseph Pulitzer rolling around in his grave. But there's no denying that the "web log" or "blog" -- as it's come to be known -- has shaken the foundation of 21st Century information; the way it's delivered and who does it. It truly is today's new frontier that has touched virtually every sector of society, and it's not going away.
Guests - Ed Garsten - Chrysler, Scott Burgess - The Detroit News, John Neff - Autoblog.com
Last week's show - "manu factura"
Autoline Detroit Podcast
Click here to subscribe in iTunes
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Reader Comments (Page 1 of 1)
Shipey 2:32PM (9/20/2007)
John,
You, sir, rock. Your show tells it how it is, even when it's not what people want to hear. You ask the hard questions, but keep an open mind. That is a breath of fresh air. Thank you.
I'm be all for a cheaply but thoughtfully produced vehicle. I could live with a 3-star crash rating. (Or not, depending on what hit me!)
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AndyM 2:48PM (9/20/2007)
John McElroy's comments are valid, there is a world out there of, comparatively speaking, poor people who need independent transport and the stuff produced by the USA & Europe is way too sophisticated for the realities of what used to be the "Third World". Western society was brought up on Ford's Model T and the "people's car " from Volkswagen in Germany. There is a vast population out ther needing/wanting another "folks wagon"
Andy.
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john.paulsson 3:02PM (9/20/2007)
Thing is, cheap vehicles will make it possible for more people to buy one and as you know, that's what bringing down the world right now. But on the other hand, new cars are often more fuel efficient than old ones.
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PiCASSO 3:07PM (9/20/2007)
Welcome, John, to AutoBlog... look forward to reading your posts.
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Seadog 8:04AM (9/23/2007)
My first fwd car was an Renault R10 5-door, one of the best of the 20+ I've had over the past 40 driving yrs. Although I've had many make the 200k mile post and still look good inside and out, seems a plug in comute car is the answer most of us need for everyday use. We can still have that monster SUV or truck for the 25% of the time we need/want to look but 75% of the time we'd save a lot of everything.
sfast 3:21PM (9/20/2007)
John McElroy sucks. I stopped watching Autoline Detroit because of all of his stupid opinions at the end of every show. The guy needs to learn how to research before he opens his mouth. HIs interviewing skills lack as well.
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larry 3:33PM (9/20/2007)
Carefully check the times for Autoline on SPEED. It DOES AIR nationaly at 7:30 am but at 7:30AM Sunday in the East......4:30am in the West. It also usually has a reairring on Wednesday Morning And: it's good idea to set your PVR,DVR to record Autoline every week.
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SPG 3:35PM (9/20/2007)
Nicely written article.
Cheap cars don't always sell. They have to look decent too.
Suzuki Esteem, that thing had no style or sales.
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Nellydesign 4:18PM (9/20/2007)
As an Esteem owner I take offense.
Well, actually I don't:) The only "esteem" it's associated with is the enormous amount of self esteem you have to have to drive one.
I bought it used during a time when I needed to move across country and my current car had just died. It was being sold by a friend for the payoff which happened to be $2000+ below blue book. A convenient set of circumstances...
But you know what? It may not be the safest car or the nicest to look at, but its been astoundingly reliable. 50,000 miles I've put on it now with only oil changes and 1 set of front brakes. It's still surprisingly tight and relatively rattle free (in Detroit!) and the drivetrain doesn't sound like a truck's the way some older small cars do. And the best part is... it's paid off. Too bad all the new Suzuki's seem to be Daewoos.
When it comes to ultra cheap cars that's going to be the key. What good is a cheap car that breaks down constantly?
CrazyKenyan 4:03PM (9/21/2007)
You have to realise that India and China are two huge markets for automobile manufacturers, with loads of potential sales. When I visited India, people told me that that it doesn't matter what car you have, as long as it has 4 wheels and you own it, and that makes it a status symbol.
Also realise that in the mid-1990's ownership of a car by the middle class was not common. The Indian Govt had huge taxes on cars, and even more, maybe 100%+ on foreign-made ones. Seeing an Audi there in 1995 was like WOW!
I've visited India a few times since 1995 and the number of foreign makes (maybe they are built or assembled locally) has increased. Air conditioning has increasingly become common in cars due to higher pollution levels in big cities, but drivers still use manual transmissions.
They don't need SUVs or vans. Folks there want a simple car that is affordable, carries four to five passengers, and takes you from A to B, and has a high mileage engine.
And try driving a mid-size car in Bombay (Mumbai) or New Delhi, it's enough hassle to change lanes. It's almost as bad as running a mile when you're out of shape.
I've read reports in the Bangalore press where the software industry folks are buying BMWs and Mercedes and then complaining it's hard changing lanes. Got to adjust yourself to your surroundings, don't expect the roads to fit your ride.
pgh 4:48PM (9/20/2007)
In my opinion. Autoline Detroit is one of the "must-watch" shows on television. John McElroy is a journalist in the truest sense of the word in that he combines a passion for his subject matter with a an incisive and insightful interviewing style all the while maintaining a good relationship with his guests. I might add that the quality of his guests is improving dramatically. I never miss his show and it's great to have him here on Autoblog.
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rt66er 5:34PM (9/20/2007)
It costs just as much to build an ugly car as an attractive one. You can build a cheap car that looks good; Ford's replacement for the Festiva in Europe is a great example. Just because it has few features and is small, doesn't necessarily mean it has to be ugly.
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Mikesright 5:59PM (9/20/2007)
Hey John,
I love the show and watch every one online, and I really like the articles you've done through wardsauto and other sites, and you're general insight into the auto industry! That being said, I disagree with allowing cheap vehicles with compromised safety and enviornmental standards, not to mention reliability and other factors.
That's not to say the cheap car won't influence part design and cost-cutting in our cars, as I'm sure they'll send over best practices and efficiencies to plants all around the world for our market. It's happening with GMDaewoo as we speak, in fact.
All that being said, welcome to autoblog and it's great to have you as a writer!
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J. Crew 6:15PM (9/20/2007)
I watch this show every week and the Tivo is always on. Good job Autoblog for getting on with John! My favorite website and my favorite auto tv show combined into one. Great success!
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St.J 8:16AM (9/21/2007)
Actually the Logan isn't that bad a look. The Dash could use a redesign for western markets but over all i found it to be a nice car. I would buy one for $8500 in an instant, heck, I would buy two.
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Tony G. 1:09PM (9/23/2007)
John,
Saw the show this morning and really like your enjoyed your interview. Way to go for Autoblog and blogs in general Looks like the Detroit News blogger and most traditional media-crossover blogs really need some help.
Regards.
TONY G.
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fizik 2:13PM (9/25/2007)
it is about time that US customers wake up!
I don't quite understand where Mr. McElroy is coming from with his assessment that no one has to wory over here.
Have you lately driven a economy rental, those are, if at all on paar with the Logan. Sorry but the chrome bezel on the automatic shifter doesn't overshine the cheap plastic and the partingline on the foam steeringwheel that cuts into your hands.
Talking about safety - GM had to take their minivan Opel Sintra off the Euro market bacause of the totall failure in the EuroNCAP crashtest 2.5 stars and a fatal neck injury was the result (the car is the same as the Pontiac Montana / Chevy Venture, which got a 3 star crash rating in the states in 2002) OK, the Logan passed the EuroNCAP with 3 stars but check a 2007 Chrysler Voyager it fails and gets 1.5 stars!
http://www.euroncap.com/tests/chrysler_voyager_2007/277.aspx
So I'd be carefull with all that bragging Mr. Elroy!
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Stan 7:44PM (9/26/2007)
John
I never miss Autoline Detroit, great show. As for the Dacia Logan; It reminds me of my first car, 1965 VW Bug. It could be the genesis of Cheap, reliable transportation. The domestics should pay attention.
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