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Why Can't We have a Cheap Car?

Overregulation makes us all poorer.

By Will Offensicht  |  January 16, 2008

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.