India's Nano stirs Detroit Auto show

The most-talked-about car at the Detroit auto show this year isn't even present: Tata Motors Ltd's Nano.

The vehicle planned by country's largest truckmaker would violate emissions and safety regulations in the US, Europe and Japan, auto executives from those markets said. The $2,500 Nano wouldn't meet consumer expectations in developed countries for creature comforts such as air conditioning, they said. Yet they're all wondering how to respond to it.

"What we're seeing really is the automotive world is divided into two distinct markets," General Motors, Vice Chairman Bob Lutz told reporters at the North American International Auto Show.

"It's akin to the coming of the Ford Model T," Aaron Bragman, an analyst at Global Insight in Lexington, Massachusetts, said, and also at Detroit's annual exhibit of the industry's latest models.

With the US market coming off its slowest year in a decade, sales down in Japan and Western Europe stagnating, GM, Toyota Motor and other automakers are turning to emerging markets such as India and China, where sales are growing more than 10 per cent a year. For GM, Toyota and other automakers the Tata entry means "pressure to come down to that price and play in that field," Bragman said.

"It's a huge untapped market, and they will either have to find a way to do it themselves or find someone who can and partner up."

Tata's unveiling of a prototype of the Nano, the cheapest car, at the Delhi Auto show on January 10 is forcing established automakers to decide whether they want to go head-to-head with such entrants, said John Casesa, managing partner at Casesa Shapiro Group in New York.

Ford Motor decided to announce plans for an Indian investment away from the Delhi show last week to avoid being overshadowed by the Nano news, Ford Executive Vice-President John Parker told reporters in Detroit.

"It is a groundbreaking product," Parker said. The Nano will "cause people to think differently about the car. I have a lot of respect for Tata."

The cheapest car in the US is the $9,995 Chevrolet Aveo from GM. In Japan that distinction goes to the Daihatsu Esse at about $6,000.