Word: cheaping
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...When Tata first suggested an ultra-cheap car a few years ago, other manufacturers initially scoffed, saying the project was a pipe dream. But if Tata lures away even 10% of the 6.5 million Indians who buy motorbikes every year, not only will it have a hit on its hands, it will have expanded India's car market by more than half. Competitors aren't willing to cede that kind of market share without a fight. Carlos Ghosn, head of Renault-Nissan, recently announced that his company was looking at building a $3,000 car in India. Fiat, General Motors...
...Carmakers aren't just targeting India. Tata Motors has plans to export its econobox to Southeast Asia and Africa as well. Ratan Tata, the chairman of Tata Motors' parent company, Tata Group, believes they can eventually sell as many as a million cheap cars a year worldwide. That may be a realistic assessment. Globally, up to 3.7 million of such vehicles could be sold annually within the next few years, mostly in fast-growing markets like Brazil, China, India and Russia, says Abdul Majeed, a partner at PricewaterhouseCoopers in Chennai (formerly Madras). "It's all about affordability and fuel efficiency...
...Building ultra-cheap cars is possible largely because of low manufacturing costs in developing countries. Tata and other Indian automakers estimate that their engineering costs alone are about half what they would be in Europe or the U.S. At the same time Tata has tapped the skills of Italy's Fiat, with which it has a joint venture in India, and engine designers in Britain's West Midlands region, some of whom were jobless after closures in Britain's auto industry over the past few years. Indian producers are relentless cost-cutters. Many, including Tata, now buy parts through Internet...
...managing director of Tata Motors. "It's a regular, wholesome car that will be a joy to drive and of course it will have very good fuel efficiency." Will that be enough to convince India's aspiring classes? Tata at the outset expects to sell 20,000 of its cheap cars a month in India, partly because consumers will see them as safer than motorbikes on India's chaotic roads. Ved Pal, 38, who works at a New Delhi finance company and who currently rides a bike, says he is tempted. "I have five people in my family," he says...
...symptom of more bad news to come for risky assets will then be the next big issue for investors to interpret. Normally, such moves are seen as bad news. But for investors who have been savvy and patient, such rocky times may offer a fine opportunity to pick up cheap equities, particularly in sectors likely to benefit from powerful long-term trends such as climate change, demographic change and the burgeoning wealth of emerging markets...