North American motorists are accustomed to paying $20- $25,000 or more for their new cars. Gone are the days when less than $10,000 cars dominated highways, there are fewer cars available for less than $15,000 these days. All that will change as pending the introduction of cheap cars from China as well as from Mexico and other Third World countries will improve the condition of cars. Will you buy one of these types of sales, or stick to one of the trusted brands? Let’s move forward for a few years to look at the most volatile car market and what it can offer you, a consumer who recognizes value. If you follow car news reports, you may have heard of low-cost cars from China being shipped to the US and Canada.
At reported low prices of up to US $6500, these vehicles have made a lot of noise and expressed concern for the entire automotive industry, both domestic and foreign. One big question asked includes this: how will domestic producers be able to compete prudently? However, prices will not be lower than reported for the first time when certain safety and pollution control measures are added; instead the final price will be around US $8500. No matter where the starting prices are set, an economic tsunami may come quickly. China's top two brands. Chery and Geely, are reportedly preparing to export cars to the US in 2008.
Both manufacturers produce several automotive lines, but the current production capacity is limited. Don’t expect more than 200,000 of these cars in the first few years, but maybe millions more if more volume was brought online. In India, several manufacturers have been quietly increasing the capacity to operate in the growing Indian market. One manufacturer, Tata Motors, even promised to build a car starting at US $2000. That's not a mistake - $2,000 for a new car! The last car sold at this price in the US is the VW Beetle. Of course, you have to go back to the late 1960s to get a new Beetle at that price. Will Tata and other Indian car manufacturers send their cars to the U.S.? Given the current state of the Indian automotive industry, this is unlikely to last long. Power is growing, but it is not in line with domestic demand. In addition, each model will need to be significantly upgraded to comply with US standards, safety, and quality standards. However, the possibility of a car that would significantly reduce Chinese models in price is interesting.
Do not think for a moment that the world's leading car manufacturers are going to take these challenges lying on the ground. Ford plans to build a car for less than $10,000 in Mexico; GM presses its South Korean arm Daewoo to get more expensive models; and DaimlerChrysler buys around to find a partner to help build his own cheapest people at the same price. Toyota, Honda, and a few other Asian manufacturers will be sure to respond. As industries are spread around the world, each company can pull the model from one factory and export it to the U.S.
Already, Honda and Toyota offer cars valued at $12,000 or less and each of these models can sell for very little money if built in countries where wage rates are very low. So, what does all this mean for consumers? Well, you probably won’t see a drop in car prices, but you’ll probably see the end of the “scary sticker” thing that surprised new car buyers a generation ago. You may find this: $60,000 Lexus ’and $6000 Scions for sale separately. It's a big difference in price, but something a North American car enthusiast may find unusual.
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