India's Tata group unveils world's cheapest car

NEW DELHI (AFP) — India's giant Tata Group Thursday unveiled what it has billed as the world's cheapest car -- a compact and no-frills family vehicle set to revolutionise the market of 1.1 billion people.

The four-door five-seater car, due to hit the market later this year at just 100,000 rupees (2,500 US dollars), has a small 33bhp 624cc engine at the rear and is targeted at Indians hoping to trade up to four wheels from a motorcycle.
The Tata 'Nano' -- which looks almost exactly like a Smart -- has no air conditioning, no electric windows and no power steering for the basic model, although two deluxe models ...

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Hyundai Rides Demand for Small Cars

Its plans for luxury models may slow, but the Korean automaker will still benefit from high gas prices thanks to its gas-sippers

Oil may have retreated from record highs over the past week, but the painfully high price of gasoline has dampened Hyundai Motor's campaign to go upscale (BusinessWeek.com, 12/7/07) with sport-utility vehicles and bigger, more luxurious cars. But $4-a-gallon doesn't seem to be hurting its growth strategy. The reason: It has a solid lineup of small gas-sippers, and just as important, ready capacity.

The numbers show this isn't the time for Korea's top automaker to shed its image as a maker of small, inexpensive cars. As its bigger global rivals slumped, Hyundai on July 24 posted a quarterly revenue record of $9.03 billion in three months ending in June, up 13% from a year earlier. Its operating profit in the quarter rose 6%, to $657 million, but currency-related losses pushed net profits down 11%, to $542 million. (The company lost $149 million in currency-derivatives investments and $99 million in its Indian operation because a sharp fall in the Indian currency increased its debt costs.)

Now Hyundai is once again trumpeting its small cars (BusinessWeek.com, 7/18/08), and it's considering building them in the U.S. starting next year (it already builds the midsize Sonata sedan and Santa Fe SUV at a plant in Montgomery, Ala.). "Just as Honda established itself with a fuel-efficient engine when the world was rocked by the first oil shock, this new era of high oil prices will serve as a similar opportunity for us," says Yoon Mong Hyun, Hyundai's managing director in charge of business strategy planning.
Small-Car Opportunity

Early signs are encouraging. In June, as overall U.S. auto sales fell by 8%, Hyundai hit a monthly record, selling 50,000 vehicles, up 14% from a year earlier, according to selling-day-adjusted statistics from researcher Autodata. Sales of the compact Elantra jumped 51%, the subcompact Accent was up 70%, and the Sonata climbed by 12%.

Hyundai is adding to its offerings of diminutive vehicles to take advantage of that opportunity. The company this year will introduce a new Elantra wagon in the U.S., based on a compact called the i30 sold in Europe. That will be the first of about a half-dozen new small models the company plans to introduce in the U.S. over the next five years, quadrupling its current small-car lineup. It may also make small cars such as the Elantra at a new plant in West Point, Ga., that its affiliate Kia Motors expects to open next year.

Hyundai's small cars are a hit in fast-growing emerging markets, too. In China and India, Hyundai's sales rose a combined 27%, to 263,500 in the first six months of this year as it has added new, small models (BusinessWeek.com, 1/30/08): the European-styled, $7,850 i10 mini in India, and the $14,600 Yuedong compact in China. The company's target is to boost market share to more than 20% in India this year, from 17% last year, and to 6.1% in China, from 4.6%. Another looming market is Russia, where Hyundai nearly doubled its car sales, to 47,100, in the first half of this year.
A Good Small-Car Environment

The ambitious growth target is linked to Hyundai's aggressive plan to add new capacity. In the past year, it has opened two new plants—one in Beijing and the other in the southern Indian city of Chennai—each with annual capacity of 300,000 small cars. The company is also building a factory of similar size in the Czech Republic for completion next year, and in June it broke ground for one in Russia that it hopes to open in 2010. "The capacity appeared excessive before high oil prices sparked a sudden hike in small car demand," says Ahn Soo Woong, head of research at brokerage LIG Investment & Securities. "Now, Hyundai looks smart with the additional facilities."
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