In India one lakh means 100,000, and Tata will sell the most basic version of its new car at 100,000 rupees, or $2,500 (not including taxes and the cost of transporting it to the showrooms). This is roughly half the price of its nearest rival, and little more than the cost of a three-wheeled auto-rickshaw. But the “NANO”, as the car is called, is no rickshaw. Apart from the fourth wheel and the doors, it has a 623cc engine that will muster 33 brake horsepower. The car should eke out 50 miles to the gallon, Mr Tata says. It complies with the “Euro III” pollution standards that prevail in India and should meet the tougher Euro IV standards with a bit of tweaking.A couple of thoughts on this.
First, Nano? What are they trying to do, grab a little bit of Apple's mojo?
Second, you can kiss sub $100 oil prices goodbye for the rest of your lifetime.
Third, for owners of this car, gasoline costs are going to make up the majority of the lifetime costs of driving. At $4.17 a gallon, $2,500 buys 600 gallons of gasoline, which at 50 mpg will go 30,000 miles. In the US that would be around 2 years of driving, but it might take a bit longer in India. Regardless, the price of gasoline will be important in determining whether an Indian can afford a car than the price of the car.
via The Economist