Saturday, January 19, 2008

Inexpensive Cars for developing countries

I know that at least one of my readers has been following the news of the recent announcement of a small car in India. He sent me an email last week and a link to the some coverage, which I'd seen covered in many of my normal channels as well. He was kind enough to share some of his thoughts with me, which I must confess I no longer have. As I recall, however, his analysis revolved around the added emissions coming from an onslaught of new vehicle owners as well as the congestion that would be added to India's roadways. This past week, WorldChanging ran an analysis as well, reaching similar conclusions to my reader.

Included as well was a remark about the development of China in the auto market. I actually defended China somewhat, as there seem to be a number of announcements from that quarter of implementing emissions regulations as well as investigating and implementing conservation measures. I'm not sure if India has done anything in this area, but I don't see many headlines to that effect, even though both India and China are the biggest fears of many concerned about global climate change and human causes.

A few days ago, I was speaking with a representative for one of the financial institutions that I work with. We chatted about the weather in New Delhi (apparently a little cooler than usual) as well as the big news. I'm not entirely sure we were clearly communicating, but he seemed very upbeat about the prospect of a vehicle being released that as quite affordable for a large section of the population. I now wish that I'd asked him what he thought would happen with traffic congestion and air quality with all those affordable cars on the road.

One thing I haven't seen discussed is what the anticipated impact on world oil prices would be of adding 500,000 vehicles to the road a year, a Tata Motors sales target. Even though the vehicles are expected to get 50 mpg or so, that number of vehicles needing to be fueled will increase India's demands on world oil markets, potentially fueling rising oil prices. Oh, and for the record, the car is expected to cost around $2,500 (100,000 ruppees).