Bellerbys Economics - Mr Stephenson

Thursday, January 10, 2008

Ta-Ta! to Expensive Cars

News coming in from India about Tata's new car - the Nanocar.

Firstly, it demonstrates a further step in India's development as a major economic superpower - still about 10 years behind China and with some institutional weaknesses that China has avoided - but nevertheless moving in the right direction.

It also demonstrates the importance of world-class companies to the Indian economy, often controlled by a small number of key families - the Hinduja family empire, the Mittal steel empire and the Tata motor company.

The new Nanocar sells for less than £1500. Luckily for western car manufacturers, India is not yet a member of the WTO. If India were a member of the WTO, it would be difficult to keep the Nanocar out of western markets - the tariff would have to be the same as that on - say - Japanese or Korean cars. It's likely that the Nanocar would soon come to dominate the small car market worldwide.

You can find out more about it here:

http://news.bbc.co.uk/1/hi/business/7180396.stm

Even so, a number of trade agreements exist between India and the rest of the world, so the Nanocar will start to filter into other markets fairly quickly - the Chinese car manufacturers may be a bit worried about this.

Environmentalists may also be worried. Even though the Nanocar is very fuel-efficient, the sheer volume planned for production will increase pollution, congestion and world demand for oil - pushing up prices even further.

But of course, you can't turn the clock back. Supply-side economists understand that increased oil prices will promote innovation in the field of alternative forms of energy - although a good deal of work is being done to develop energy sources from biofuels, hydrogen cells and further back in the chain, work is even progressing on fission and fusion reactors, solar energy, geothermal sources, wind and wave sources. Unfortunately, it may take some years for any of these to come to fruition.

7 Comments:

  • In my opinion, if India became the member of WTO the Tata's new car-the Nanocar will effect a lot of problem such as the environment pollution and because Nanocar is cheaper then other brand so it might be dominate in the car market worldwild.Also the oil will be increase and it will effect the global economic!

    By Blogger Ava Chao, at 10:26 pm  

  • No doubt, ta-ta car is a threat to western countries even China. However, it is still a fuelled car. Aiming at the environment preservation, countries can carry out new measure as establishing green barrier, for example increasing the import tax with its discharg rate. One is government really decreases pollution, the other is protecting their automotive industry.

    By Anonymous gene, at 1:53 am  

  • No doubt, ta-ta car is a threat to western countries even China. However, it is still a fuelled car. Aiming at the environment preservation, countries can carry out new measure as establishing green barrier, for example increasing the import tax with its discharg rate. One is government really decreases pollution, the other is protecting their automotive industry.

    By Anonymous gene, at 1:54 am  

  • The Nano cars doesn't look good and this is 2008!!! We do not need anymore cars that still use petrol. Cars have to be made to use hydrogen rather than petrol. Furthermore, the nano car has no air conditioning and the widows have to be wind down by hand. All in all, the Nano will pollute India even though it is cheap.

    By Anonymous william s., at 8:45 pm  

  • Well, it is a good thing that there is a cheap car that people can afford. However, this could effect the environment as if i predict that this car is affordable, so more people will use less public transport and use more private vehicles, this could also happen to taxis...as an exception. Anyway, we have to hope and look in the future that if this car would be able to with a more environmental caring fuel ...such as solar energy or electric as they have already happened. Also, this cound create traffic jam and also as you know that India has a population crisis....I will stop here...

    By Blogger Watcharaphon Pansanit (Lee), at 9:34 pm  

  • Well my personal opinion about this matter, is that I think the new INDIAN car is going to be good in some ways but what worries me the most is the traffic problems that this may cause to countries like INDIA AND CHINA, because of the overpopulation problem, also that the car is not environmentally friendly and may bring terrible consequences to the environment and could accelerate the global warming process.
    Also this car does not have any security airbags, also the engine is too small which means that is the car is being force the oil will not be properly filtered MORE POLLUTION PROBLEMS.

    By Blogger Diego, at 9:42 pm  

  • Because of the Tata Motors has unveiled the world's cheapest motor car at India's biggest car.The sistuation will lead to highly competitive with the other car company.Maybe it will bring much more profit and increase the ecnonimic growth of the india, but it represents that a new competition are being faced for Nanocar

    By Anonymous steve wei, at 10:48 pm  

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