The market for bargain basement cars costing as little as €2000 (£1400) is about to grow dramatically.
CAR Online is reporting from Bosch’s annual technology seminar all week – and we grilled the bosses at the world’s biggest components supplier to find out about the soaring demand for cars priced under €7000 (£4900). Bosch’s president of gasoline systems, Wolf-Henning Scheider, said: ‘According to our estimates, this vehicle class will reach a share of 13 percent of the world market in 2010. That means a volume of around 10 million vehicles a year.’
These are big numbers, with profits aplenty for companies that serve up the right product. Renault famously launched the Dacia Logan as the €5000 car in 2004 and expects to build 1 million annually by 2009, but it won’t be the only manufacturer operating in the bargain basement. Indian manufacturer Tata recently announced the ‘one-lakh’ car, named after the equivalent of 100,000 rupees or €2000, while VW is plotting a cheap model to slot under the Fox and Toyota is preparing a sub-Aygo car too.
The reason for such growth? Easy. The blossoming Asian markets, especially China and India, have a huge appetite for affordable cars. And the rate of growth in China is truly scary. How about 25 percent growth year-on-year since 2001? We’re talking about 8 million vehicles being sold this year in China alone, and the forecasts keep on growing… This is a huge opportunity for manufacturers, and suppliers like Bosch are helping them produce the cheap cars required to mobilise a nation. ‘First-time buyers in India are switching from mopeds to cars,’ said Scheider. ‘Robustness, family friendliness and ease of repair are key factors for them. Buyers in western Europe are more interested in safety, suitable performance and high reliability levels.’
So Bosch is helping Tata engineer simplicity into its bargain four-door. The easiest way to cut costs is to ditch unnecessary equipment, so don’t expect complex electronics or luxuries like sat-nav. It’s also studying two-wheeled technology and seeing if low-cost parts like motorcycle engine management systems can be shared or adapted for use on cheap cars. Only if these two approaches don’t work, then it resorts to building bespoke, inherently low-cost components. But achieving high volume scale is the best way to keep prices low.
The one-lakh Tata will use a two-cylinder engine, using a simplified fuel injection system, without the turbocharging, direct injection and complex sensors becoming the norm in Europe. Bosch is supplying the alternator, brakes and engine management systems to Tata – much of it developed in Asia to keep prices down. It hopes to win a third of the sub-€7000 market by 2010. Tata is also developing cheap new construction methods. Toyota employed similar systems when it developed the Aygo/C1/107, such as the all-glass tailgate and interchangeable front seats. So expect to see the minimum number of pressings and plenty of clever construction techniques. We’ll have to wait a while longer to hear the full story about the bargain Tata. But a modern family car for the same price as a week’s holiday in the Mediterranean? It will surely become the Indian takeaway of choice.