Nissan Studies Potential for Cheap Cars in U.S.

Nissan Motor Co. Ltd. still is exploring the possibility of offering ultra-cheap cars in Western markets, Renault SA/Nissan CEO Carlos Ghosn says.

Speaking to reporters at the Tokyo Motor Show, Ghosn says there potentially is “a big market” for vehicles priced between $3,000 and $10,000 in Western countries and specifically, the U.S.

Currently, the most affordable '08 model in the U.S. market is the Chevrolet Aveo hatchback, which starts at $10,595, minus destination and handling fees.

However, whether Americans or other Westerners will accept such a vehicle remains to be seen. “I'm not saying yes or no,” Ghosn says. “I'm saying we don't have enough data today to answer whether it can be exported to mature countries.”

Spurred by Indian auto maker Tata Motors Ltd.'s declaration it will offer a “one lakh” or $2,500 minicar, Ghosn says established auto makers could be usurped in developed markets by upstart OEMs if they don't offer low-cost vehicles.

Nissan, together with alliance partner Renault, is exploring a partnership with Indian bike maker Bajaj Auto Ltd. to produce an inexpensive car for the Indian market.

Ghosn says partnering with Nissan would be good for Bajaj because a $3,000 vehicle would be the bike maker's highest-priced and most technology-intensive product.

“We know it's coming,” Ghosn says of the arrival of ultra-cheap cars for India. “If someone's going to do it, we can.”

Critics say bringing such a vehicle to mature markets is not feasible because the cost of new content to meet emissions and safety regulations undoubtedly would raise the car's price. But Ghosn says even with these changes, the vehicle would be more affordable than anything now available.

“If you reinforce the car, which is basically a $3,000 car, you're going to still end up with a very cost-competitive (vehicle),” he says.