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.
This is in the light of Tata, which unveiled the $2,500 Nano, the world's cheapest car, 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 Mr.Takeo Fukui, President & Chief Executive of Japan's second-largest automaker. "I don't think our Indian customers buy cars that are cheaper but at the same time poor in quality," he told in a press conference yestarday.
"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 added.
Tata says the Nano is 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," said Mr.Fukui. "As for four-wheel vehicles, the battle will be tough," he added.
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