THE battle is on among some of the world’s leading car makers to build cars as cheaply as possible. Indian company Tata has unveiled plans to build a people’s car that will cost $2800 while carmakers Renault and Nissan are seriously looking at a vehicle about $3500.

Renault already has the mass-production Logan, which sells below $10,000 in Europe.

Meanwhile, analysts say Toyota, Hyundai and Chinese automaker Chery also are looking to make ultra-cheap cars in India.

However, Tata has been criticised by green advocates who say its car would simply add to traffic chaos and carbon emission, a claim Tata chairman Ratan Tata vehemently refutes.

He says his company will bring what is billed as “the people’s car” to market next year and its price will be on target, despite a sharp rise in the price of steel and other inputs since the project announcement three years ago. Details of the car have not yet been released.

Carmakers from around the world are keenly watching progress in the Tata project, which analysts say could set new price benchmarks and force other manufacturers to follow suit.

But environment groups say the low price will bring the car within the reach of millions of Indians, triggering more pollution and burdening the country’s crumbling infrastructure.

However, Tata says his car will adhere to strict quality norms like any car in the developed world. He adds: “We will have less pollution per vehicle than any other vehicle in the country today”, indicating that pollution levels will be close to that of two-wheelers.

He acknowledges there will be more congestion, but says the answer is in building more and better infrastructure rather than asking car makers to roll back production.

Meanwhile, David Cole, chairman of the US Centre for Automotive Research, says a small car with a small engine is likely to pollute less than one with a large engine.

But a clean car in India would not be likely to meet US Environmental Protection Agency pollution limits, he says.

“Most of the developing countries, their emissions standards are just sort of getting cranked up now. The baseline is not very difficult to surpass,” he says.

Tata says he is curious as to why his low-cost car catering to the aspirations of average Indians is being singled out for criticism.

Earlier, there was scepticism that the company could stick to the price target and now it is facing “flak for a different set of reasons”, he says.

The company plans to make between 250,000 and 500,000 units a year, Tata says. The base model will cost 100,000 rupees ($3000), but there will be two more variants at a higher price with added features.

Keeping fuel options flexible, including the use of ethanol, is also being considered, he says.

The project has spurred other global carmakers to explore similar ventures. Already, Renault and its partner, Nissan, are trying to determine if they can sell a compact car for around $3500.

VW, meanwhile, unveiled its Up! concept at the Frankfurt motor show this year, a van-like Space up! concept at the Tokyo Motor Show and a Blue up! concept at this month’s Los Angeles motor show.

The up! concepts are aimed at reviving the low-priced people’s car philosophy of the original VW Beetle.

VW says development of production versions is already under way.

It is expecting to have up!s on the road within the next three years.

German auto consulting firm CSM Worldwide says the new Tata could help Tata Motors emerge as India’s largest manufacturer of cars and light trucks by the year 2013.

Meanwhile, Tata is expected to be named as the preferred bidder for Ford s Land Rover and Jaguar brands in the next few days.

Washington Post says : “The cheapest car in the world is being released during a time of good fortune for many Indians. While two-thirds of the country’s population still struggles on $1 a day, millions of people here have emerged from grinding poverty into the lower middle class. The Asian subcontinent’s largely service-based economy has been growing 8 to 9 percent a year, and World Bank studies estimate that India’s middle class will expand from 50 million people today to more than 500 million by 2025.”

The steel-to-software Tata Group is one of India’s largest and most respected conglomerates. Its 96 companies employ about 200,000 people and have annual sales of more than $20 billion. The group has been leading a wave of Indian overseas investment as local companies have used the wealth generated in India’s strong domestic economy to make acquisitions around the world.

Also read: The Tata Rs.1 Lakh Car Story

In Picture (Above) : Robots used in Tata Motor’s Car Plant

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