Honda Motor is staying out of the race to develop ultra-cheap cars, hoping motorists in fast-growing markets like India will pay more for safer, greener vehicles, its president said yesterday.
India's Tata last month unveiled a US$2,500 car, the world's cheapest, which is set to hit the roads there by October. French-Japanese partners Renault and Nissan aim to launch a similarly priced vehicle by 2010.
"Honda will not make cars at such a low price," said Takeo Fukui, president and CEO of Japan's second-largest automaker.
He said he didn't think the firm's "Indian customers buy cars that are cheaper but at the same time poor in quality."
"Whether it is the Indian market or the Chinese market, I believe that state-of-the-art safety and environmentally friendly technologies are necessary for our products," he said.
Tata says its new "Nano" cars are safe, affordable and meet emission requirements in India and abroad. But environmentalists fear they will jam up India's already clogged roads even further and add to choking pollution.
Analysts said the era of ultra-cheap cars will spur the creation of a vast new market segment in India, a nation of 1.1 billion people, where the auto sector is already booming amid rapid economic growth.
"In India, there will be competition between motorcycles and four-wheel vehicles, because India is a hot country and motorcycles don't need to use air-conditioners," Fukui said.
"As for four-wheel vehicles, the battle will be tough," he said.
Honda, a pioneer of environmentally friendly motoring, sees hybrid vehicles accounting for one-tenth of its global sales by 2010.
"Demand for fuel-efficient cars is likely to grow," Fukui said.
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