Cheap Cars Could Be Big Bonanza - Autoline on Autoblog with 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!

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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.

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