Why Can't We have a Cheap Car?

Overregulation makes us all poorer.

The International Herald Tribune reports that Tata Motors, an Indian conglomerate which is about to buy Land Rover and Jaguar from Ford, has announced a $2,500 automobile.

The 4-seater Nano, with an engine around 625 cc, will have a dealer price of 100,000 rupees, or $2,500, and will go on sale later this year. Taxes and profit margins will push up the price for buyers, but it will still cost about half the cheapest car currently on the market, a 25-year old model from rival Maruti Suzuki.

The compact but curvy Nano stands in sharp contrast to the luxury Jaguar and Land Rover brands that Tata is negotiating to acquire from Ford Motor.

Why can't we Americans buy cheap cars?  The cheapest car in the US costs about $20,000, about 8 times the cost of Tata's offering.  Are the Tata engineers 8 times as smart as the Japanese and Korean engineers who designed the cheapest cars we're able to buy?

They didn't cheap out on safety.  Auto Savant says:

...the end result is a conventional automobile that meets international offset and side-impact tests.

On the other hand, it doesn't have air bags.  Even though it would reduce carbon footprint compared with other cars, it probably won't meet our finicky EPA regulations.  Its bumper height is probably wrong.  Business Week said:

It meets domestic emissions norms and will soon comply with European standards.

International carmakers and media doubted Tata's ability to meet international environment and safety standards.

Being very small and having a small engine helps meet environmental standards.  If it meets crash tests, do we really care about details like bumper height?

It's well known that being poor shortens life expectancy.  By making our cars cost SO much more than necessary, our regulators and bureaucrats have made us all a lot poorer.  Let's hope that the Tata example gives us an incentive to demand that our government let us drive cars that cost a lot less.

Will Offensicht is a staff writer for Scragged.com and an internationally published author by a different name.  Read other Scragged.com articles by Will Offensicht or other articles on Bureaucracy.
Reader Comments
This is off topic, but I was reading about this new car last week on a different site, wired.com I think. And in the center column, a columnist was discussing the iPhone and compared it (literally) to the greatest inventions of all time. He literally said it belonged "alongside fire and the wheel". I about fell off my chair. Again, this has nothing to do with the new Tata, but your article made me remember it. Some people are such tools... iPhone as great fire and the wheel... Wow! Apple really puts a strong brand of Kool Aid. Sorry, I'll stop now.
January 16, 2008 5:09 PM
Wait just a tick here... "The cheapest car in the US costs about $20,000"?!?!? Most manufacturers have new cars in the $10-$15k range, not to mention the availability of solid used cars in the $1-$4k price range.

Its hard to believe you're basing an article on a car with a top speed that wouldn't even be able to meet minimum speed requirements on some our freeways. And then comparing that with the solid, reliable $10-$15k cars available new in the US.

You also fail to mention things the tata nano lacks, like a radio, air conditioning, electric windows etc. No safety features like air bags. No power steering.

This car might be a good replacement for Indians trying to pack a family on a motor scooter, but can't come close to a car any American would want driving on our roads.
January 16, 2008 6:40 PM
If you live in Texas, a Tata would not be advisable. Most Americans, however, live in big cities, where you rarely if ever can reach "highway speeds" even on the highway because of traffic congestion. So that's not such a big deal.

$20,000 may be a little high. But once you add tax, title, delivery fees, and so on to your "$13,000 car", it's not so very off.
January 16, 2008 8:48 PM
I'm with Chris. This car is not compareable by ANY stretch of the imagination with regular cars.
January 16, 2008 8:59 PM
Patience --> "Most Americans, however, live in big cities"... Either your definition of "most" or "big city" is different from mine. The top 10 cities have maybe 25-30 million people, and the next 20 maybe another 100 million. That total 130 million is a far cry from the 300 and some million American cities. And, granted, I live in DC so it's not the biggest on the list, but I'd say that I spend more than half of my time driving highway speeds.

True, tax, title, delivery fees, etc will add cost to the $13k car. But not $7k... more like $2k, max -- bringing it to $15k _total. If that's the way you're comparing, you also have to take those into account with the nano... that would probably about double the cost, as a big chunk is the freight cost.

The equation ends up being pretty much the same... A safe, reasonably performant car with all the features Americans have become accustomed to (and with a good warranty) for $15k vs a tiny, crappy all around car for $5k.

There isn't even a comparison. A more apt piece of American hardware to compare to would be a midrange John Deere ride on lawnmower. That's basically what you get with the nano.
January 16, 2008 10:41 PM
"A more apt piece of American hardware to compare to would be a midrange John Deere ride on lawnmower"

Right on. When they say "top speed 65" that doesn't mean that it will be doing that all the time and therefore is useable on highways or even boulevards. The average American car has a top speed of 120-130. This thing is a little go-kart with enough safety parts stapled on to pass regulation.

Could we make cars cheaper? Sure. But for what Americans want, it wouldn't even come close to this.
January 17, 2008 8:13 AM
The destination fee alone would be 25% again of the entire price. Unless they drop the destination fee because it's small and light, but I doubt that will happen. It's usually about $500 per car. They might go for something like $350. Tax is another 4-5% depending on the state you live in. License, permits, dealer markup.... This cheap, piece of crap would be like ~$5,000 to get it off the lot.
January 17, 2008 8:23 AM
car, schmar. i can't believe this little piece of sh*t actually passed the safety regs. in the u.s., it would take far more money than it would be worth just to pay off the safety boards. i know, personally, that it has come to that. manufacturers want to get the car out the door fast, safety boards want it to wait for 6 months, you do the math. i could write a book on the process.
January 17, 2008 4:52 PM
Most of you all are spoiled in thinking the finer things are a must have. I would ride a horse to work if I would not get a ticket from our broken goverment which Will be the cause of a revoluton, the very thing we stick our noses in at other countries and try to shuv our broken politics down there throats. A horse would only leave behind turds which would inturn make the grass grow so you can breath, morons Hows that for saving green house gases! There has been and are many ways to cut costs and live without the burdens, but again thats not what our goverment wants, Its the reason the common man cannot afford solor systems for there homes..what would we do we didnt have to show up to the APEC meetings..save money, reduce waste...seems logical, exactly why we dont do whats right, no money in it...If we had a goverment which cared and actually had the ability to do something other than pave the way for the electeds future, healthcare, retirement with raises added in for future cost of livivng impacts, etc we would have taken care of key issues long time ago, Healthcare free for all americans, schooling and 4 years of college free for all Americans, and a straight tax for all.....I could go on but its only a opinion.....
January 23, 2008 11:29 PM
Aeroglide is a dolt. The "finer things" are not a "must have" for anyone, but it's perfectly fine that everyone wants them. That's one of the factors that drives the US economy. Free health care, free school? What are you talking about? Why should your rich friends buy you those things? And while your're at it, why not a free house and car for everyone too?
January 24, 2008 8:00 AM
Thanks for the kindergarten perspective, Aeroglide. People like you shouldn't be allowed to vote.
January 24, 2008 8:02 AM
Unfortunately for your dream scenario, aeroglide, livestock is a major contributor of so called "greenhouse gasses". In fact, a U.N. report shows that emissions just from cattle have a greater impact than cars (http://www.independent.co.uk/environment/climate-change/cow-emissions-more-damaging-to-planet-than-cosub2sub-from-cars-427843.html). To show how far this has gone, a swedish university is even studing cow belches (http://news.wired.com/dynamic/stories/O/ODD_BELCHING_COWS?SITE=WIRE&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2008-01-21-12-42-06). And you want to compound this problem by dramatically increasing the amount of livestock?

I'm not even going to address the vast and sweeping political changes you arbitrarily suggest. Next time you may want to actually have a grasp of the "problem" you are trying to fix before suggesting a "solution".
January 24, 2008 9:12 AM
Thanks for making my point...Its because of clossed minded individuals like yourselves we dont have the ability to make positive changes...This has nothing to do with the rich as you say...There is plenty of money in the system to do whats and spend it on the right things it just doesnt happen..And yes a kindergardner could do a better job than is currentley being done....And Gregory it is apparent you must be one with plenty of money, thats why whats best for the majority is not in your best interest..You must have great health care and your kids college paid up..How nice for you....Climb off you tower and join the majoriy of us who dont have that option.........And I just stumbbled by this site because I research ways to use natural resources better and why they are not made availiable to the common man, or affordable anyways,,so I leave the dream world you and your blogers are are in to yourselves ..You will recall this conversation if you live long enough to see what will come..
January 25, 2008 4:26 PM
Kia Rio $11,515
Hyundai Accent 10,775
Toyota Yaris 11,350

Even after tax and title it's still not $20k
January 31, 2008 2:35 PM
So then the question is (assuming the numbers that DoYourResearch provided)... Are American/Japanese cars 5 times as good as this Indian one? But that's not even really accurate since the Indian one would run like $4-5k in the US after destination, tax, etc. So are the cars 2-3 times as good? I think the answer is resoundingly yes.
January 31, 2008 3:16 PM
I stand corrected about car prices. mea culpa.

The question is NOT whether the cars being sold in America are 2-3 times as good, the question is WHY we permit all those regulations which boost car prices so much. For example, air bags add a lot to the price of each car and cost at least $5 million per life saved based on the number of cars sold and the number of lives saved. Is that worth it? I say no, we should spend the money on something else.

AS I SEE IT, we ought to let someone import these cars to the US and let consumers decide. If a person driving a few miles to work can get a car that's 1/3 as good for 1/3 the price, and can use the extra money for something else, he ought to be permitted to do it. Individual choice is the American way, but the bureaucracy no longer lets us to choose to buy cheap cars.

That's my beef.
January 31, 2008 3:32 PM
I'd like to see that little car with those micro wheels blasting along in Denver in 65 mph bumper to bumper traffic with a Kenworth 18 wheeler right behind it when it hit one of our Rocky Mountain size chuck holes... If was in a snow storm they might not find it 'till spring!
July 12, 2008 4:14 AM
jackkeats has a valid point for many parts of the US and for many drivers. The issue is NOT whether such a small, fuel-sipping car would be the car of choice in all parts of the country, it would OF COURSE not be what one would buy for long drives through the Rockies. BUT in high-traffic places like New York City or Boston, being permitted to buy a small, cheap car might be good for someone who simply HAD to have one.

There are many US cities where public transportation is less well developed than in NYC or Boston; people in those cities would benefit from being able to get cheap transportation. We'll grow REAL OLD waiting for public transport in most cities.

Again, the point is that buyers should decide, not bureaucrats. Real Americans buy what they want.
July 12, 2008 7:11 AM

I live in India and i think Nano is a path breaking invention. its just what the public needs, it cheap, has an extremely high fuel economy, and is small and sharp which it makes it ideal for our narrow congested raods. what it lacks in basic amenities, it makes up in versatility and design. its perfect for the Indian driver who only cares about price, period!

as far as other countries are concerned, its going to do great in any city across the world that faces crazy traffic, albeit it will definitely be more of a hit in not-so-affluent neighborhoods

as far as Americans are concerned, i know the initial shock with the size will be a difficult pill to swallow. but rest be assured that it will definitely meet all emission and safety regulations before they launch it in the country. so it will defeintely be as safe as other compacts availabel for $15,000 and will have all the basic features like air conditioning, air bags, music player, foldable seatbacks etc as standard features. that may bump up the price tag a tad but it will be way way cheaper than any other car available in US today

will the American people accept it? well, as jackkeats puts it, there are many cities in US, like New York, DC are the 2 i have driven in and i know traffic jams are a given and parking can be a real pain. i have personally had so many evenings out where id rather metro it than take my car coz i know illland up sending 40 mins looking for a parking space. what would i give to have a teeny tiny lil Nano in moments like those! besides, of course there are people out there who cant afford even a $10,000 car.. especially the ones who lost their jobs recently.. its better to buy a small cheap car than run up huge home mortgages dont you think?
July 3, 2009 2:57 AM
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