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Roadblocks Ahead for Low-Cost Cars

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By Bruce Einhorn

Roadblocks Ahead for Low-Cost Cars

Indian billionaire Ratan N. Tata, chairman of Tata Motors, has captured the imagination of auto executives and consumers with his ambitious plan to launch the world's most inexpensive car. The Tata Nano, unveiled early this year and set to go on sale in October, will have a sticker price of about $2,500. The goal: A high-quality, low-cost car that can serve the needs of drivers in India and other emerging markets. Other automakers including Nissan and Hyundai have announced similar projects to develop ultra-low-priced cars for the developing world. However, Tata and the others came up with their plans long before the days of skyrocketing prices for oil, steel, and other commodities. With steel prices rising over 40% since Tata announced the Nano in January, for instance, it has becoming more difficult for Tata to meet its price target. And other companies are rethinking their low-cost auto plans. Here's a look at some of the key players and impact of inflation on their strategies.