The Truth About Cars » low cost cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Fri, 18 Jul 2014 20:52:49 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » low cost cars QOTD: What Do You Want To Know About The Nissan Micra? Fri, 09 May 2014 17:54:55 +0000 450x298xMicra-14-450x298.jpg.pagespeed.ic.DYLxdk25LH

To paraphrase Tony Judt, Toronto is not the great Canadian city – that will always be Montreal. And I’ll be going there next week to test out the Canadian-exclusive Nissan Micra.

Nissan says that Montreal was picked due to the European character that the city is known for, and is reflective of the Micra’s European roots blah blah blah. What’s really interesting is the fact that the Micra is basically the ideal car for Quebec, a province full of narrow streets, high gas prices and notorious skinflints who still demand cars without A/C, power features or automatic transmissions.

The much touted $9,998 price tag may be a loss-leader gimmick in the rest of the country, but those base edition cars will sell in decent numbers in Quebec, especially in the northern regions where it never really gets hot enough to need A/C. Let us know what you want to learn about one of the first low cost cars to come to the NAFTA zone outside of Mexico.

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Chart Of The Day: The Hollowing Out Of Europe’s Middle Class Car Market Wed, 07 May 2014 14:21:59 +0000 FCAEuropeSlide


One of the frequent themes discussed on TTAC is the rising inequality of the mainstream car market in Europe. Since the Great Financial Crisis, Europe’s auto market has not only undergone a severe contraction in terms of volume, but also a radical shift in its composition.

Prior to the Great Financial Crisis, the “mainstream” brands (think Ford, Opel/Vauxhall, Renault, Peugeot, Citroen) had a firm grip on the majority of the market. Budget brands were not yet established – only Skoda had any real legitimacy, Dacia was still a punchline and GM’s Korean offerings were more like the Nexia than the Cruze. Premium brands like Mercedes-Benz, Audi and BMW were offering smaller, more affordable nameplates (like the A-Class, A3 and 1-Series), but they were still confined to the upper echelons of the segment.

What a difference a decade makes.  Budget offerings have grown increased their market share by 37 percent, while premium cars have grown another 28 percent. And it’s all coming out of the mainstream segments. And that situation is only going continue over the next 5 years.

From a product perspective, it’s easy to understand just why this happened. At the bottom end, brands like Dacia have been aggressively expanding in European markets, as well as rolling out new models. While nobody would try to pass them off as any sort of premium transportation, they are gaining a certain sort of “cheap chic” cachet as basic, unpretentious transportation. The fact that they’re winning critical acclaim doesn’t hurt either.

The premium end of the market is a bit more complex. On the one hand, the luxury auto makers have been chipping away at the traditional territory of the mainstream auto makers. Mercedes, Audi and BMW still offer the A-Class, A3 and 1-Series, but there are more lower-end nameplates too: the Audi A1 and Q3, the Mercedes B-Class, CLA and GLA and the BMW X1. Pricing for most of these models is within the upper-end of a well-equipped conventional car. Given the choice between a very well-equipped Ford Focus and a more modestly equipped German luxury car, a good number of consumers will opt for the latter – even if the premium car might be qualitatively inferior.

The other, more politically dicey argument to be made, relates to income inequality. Car ownership in Europe has always been a more expensive and difficult proposition than in North America. Middle class consumers who can afford a car in Europe’s current economic climate might be more inclined to go with a low-cost car like a Dacia, rather than spend the extra money on the Renault equivalent. Meanwhile, increasing inequality means that there is more demand for premium cars of all stripes. Luxury brands offer more performance car and SUV nameplates in 2014 than they did in 2004, and the demand has to be coming from somewhere. Not all of it can be in the lower tiers of the segment.

So what’s the solution if you’re a mainstream brand, and your customer base is as weary of ever buying a new car? Simple. Make a cool product that’s easy to afford.

Thanks to Fiat Chrysler for the chart, which was shown in their latest Five Year Plan.

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VW Budget Brand Hitting Budget Wall, Still Under Consideration Mon, 03 Mar 2014 14:47:21 +0000 2013 Volkswagen Up

In 2012, Volkswagen began research into starting a budget brand in the vein of Datsun and intended rival Dacia, with the aim of having a full lineup ready for sale by 2015. Two years later, the budget brand has hit a budget wall, and that’s only the start.

Autoblog and Autocar report VW is having issues hitting safety and quality targets while maintaining the low-cost pricing — aimed between 6,000 and 8,000 euro; the Up above begins at nearly 10,000 euro — the automaker expects for the unnamed budget brand.

Though no business case has been found thus far, VW’s project is still under consideration as technicians pour over how similar rivals — including one-time partner Suzuki and considered partner Proton — are able to build low-cost vehicles without compromising on quality or price. Even though Renault-Nissan manages to be profitable with Dacia, VW is concerned that a low-cost car would erode their own margins.

Last year, Volkswagen announced they would work in a joint venture with Chinese automaker FAW to bring a budget vehicle to China by 2016; cost issues are affecting this effort, as well.

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Beyond The BRICs Wed, 23 Oct 2013 12:30:02 +0000 Not business as usual_1

Emerging markets have been a big theme at TTAC for the past few years, with our coverage going beyond the cursory articles on automotive developments in the BRIC countries. Our articles on places like North Africa and Indonesia aren’t always the most popular, but we keep an eye on them for a very important reason. These countries are the final frontier for growth in the automotive sector.

Boston Consulting Group released a report that urges auto makers to look beyond the BRICs, to a group of 88 countries that contain roughly 40 percent of the world’s population. Collectively, annual growth of 6 percent is expected, below India’s 10 percent, but on par with China and outpacing both Brazil and Russia.

Rather than cover all 88 nations, BCG identified the “Future 15″ countries where car sales are expected to show strong increases in sales (Iran, Turkey, Saudi Arabia, the Ukraine, Indonesia, South Korea, Thailand, Malaysia, Taiwan, Mexico, Argentina, Colombia, Chile, South Africa and Algeria), as well as four regional areas that will serve not only as sales hot spots, but also as future locations for assembly plants, R&D and sourcing. Not surprisingly, these are based in North Africa, the ASEAN region, the Middle East and the Andean region in South America.

The need for specific regional strategies is a key theme in the report, with BCG devoting plenty of space to the need for product, financing and sourcing solutions that are best adapted to regional characteristics. Among their examples are the importance of offering a vehicle with a low tax burden in the Middle East, a tailor-made financing plan for Latin American consumers from Chevrolet and Renault’s North African assembly efforts for its Dacia brand.

One of the more interesting examples highlighted by the report was that of the ASEAN countries. Toyota is overwhelmingly dominant in Indonesia, its biggest market, and one possible reason is because of its ability to build products at an appropriate price-point that strongly resonate with local buyers. A side by side comparison between the Japanese market Sienta MPV and the Indonesian Avanza shows how this is done.

On the surface, the two seem indistinguishable, but under the skin, they are vastly different cars. The Sienta rides on a platform shared with the Yaris, while the Avanza uses a rugged, body-on-frame rear-drive layout with increased ground clearance, to handle Indonesia’s rougher roads and frequent flooding. Its powertrain and interior are much less advanced, and the Avanza has fewer creature comforts. But it’s built to a price, costing as much as $5,000 less than a Sienta, a fact that’s reflected in the slab-sided body panels, which are easier and cheaper to stamp. This kind of specialization is what’s allowed Toyota to capture 90 percent of Indonesia’s market, giving them an enormous head start in what is expected to be the next big place to sell cars.

ASEAN is not the only region where Toyota enjoys the top spot. The auto maker is leading slightly in volume in the Middle East, though second-place Kia is essentially equal in terms of market share. Chevrolet is regarded as the leader in the Andean belt, while Renault and Dacia are tops in North Africa. While Korean OEMs also have a strong showing, both Renault and Peugeot are strong in the Middle East and Africa, even as their efforts falter in Europe.

The common thread with all of this is an emerging middle class in regions where that notion did not exist. With prosperity on the rise, they are eager to attain greater mobility and freedom though an automobile of their own. Along with personal transportation comes the possibility of good jobs in assembly plants, sales and after-sales, logistics and other related industries. Renault and Dacia have begun to look to North Africa as a regional hub not only for the African market, but for the Middle East and even Europe. Nissan’s Datsun brand is one of the first to explicit target the “Beyond BRIC” countries, with stated aims to expand into Indonesia and Africa in the near future.

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More Datsuns On The Way – Could One Of Them Be A Minivan? Mon, 09 Sep 2013 09:30:25 +0000 Datsun_1519061g

The Datsun Go is about to get some company, in the form of two new models developed for the Indonesian market.


The two new cars will get their debut next Tuesday in Jakarta, and be priced above the Go, at just under $9,000 (compared to $7,000 for the Go). Indonesia is being targeted as one of the next “up and coming” auto markets, with a large population and a booming economy. Currently, Indonesia’s auto market is dominated by Toyota’s range of small, rear-drive minivans, but challengers like General Motors are hoping to grab some market share with products like the Spin, a front-drive minivan also sold in Brazil. In light of that, perhaps one of the Datsun products is a people mover? We’ll find out next week.

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Renault-Nissan To Launch Modular Architecture For Low-Cost Cars Wed, 17 Jul 2013 12:00:47 +0000

Click here to view the embedded video.

In India for the relaunched Datsun brand’s first car, the Go, CEO of the Renault-Nissan alliance, Carlos Ghosn, announced that Renault and Nissan will jointly develop a platform for low cost and ultra low cost cars aimed at India and other emerging markets, which Ghosn believes will make up 60% of the global automotive market by 2016. To do that, the alliance will spend another $5 billion on investments in their Indian operations over the next five years. Renault-Nissan is committed to using India as its global hub for emerging markets, developing the cars there as well as assembling and exporting them.


Renault-Nissan’s CMF Architecture

The new low cost cars will reach the market in 2015 and be engineered from the CMF-A platform, an iteration of the alliance’s  recently announced Common Module Platform. The CMF-A platform will be used across the alliance at the Renault, Nissan and Datsun brands. Don’t expect a CMF-A based Infiniti, as the platform is engineered for low cost, not luxury. The variant of the CMF was developed in India itself. Speaking to The Hindu at an event in Chennai, Ghosn said

We see India easily being in the top five markets for Renault and in the top ten markets for Nissan in future… The new platform was Indian designed, Indian engineered and made for Indians. This platform has been built ground up jointly by Renault and Nissan and it will be state-of-the-art and most innovative… We are breaking new ground with CMF-A to meet and exceed the high standards of consumers in the world’s fastest growing economies, particularly people buying a new car for the first time,.. Our frugal car will be at entry-level prices, if you understand what I mean. Our intention is to come out with a car that will be totally modern, Indian engineered and not have outdated technology, but let’s make it clear, we don’t want to compare ourselves to the Tata Nano, or benchmark against it.”

Much of the money for their investments in India will apparently come from the savings that Renault and Nissan are achieving through things like shared development costs. Christian Mardrus, Renault-Nissan managing director for logistics, said that the two companies together will save $4.57 billion (3.5 billion euros) in 2015 alone.

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Generation Why: Well, At Least We’re Not Europe Thu, 09 May 2013 18:54:29 +0000 youthunemployment


Yet another bit of bleak data from Europe relating to new car sales. A popular school of thought holds that young people’s aversion to cars is largely rooted in economic factors. When everyone under 30 is broke, living at home and wallowing in student debt, the last thing on their mind is a car. But the hope is that once things turn around, it will be time for Generation Y to get motoring again. At least in North America. Over in Europe (or certain parts of it, at least) things are much more bleak.

Youth unemployment in countries like Greece and Spain are at staggering levels. 54.2 percent of Greek youth are unemployed according to the above chart from The Atlantic. Spain is a little behind – or slightly exceeding Spain, depending on your sources. The situation is less severe in other Eurozone countries, but still bad, as evidence by the figures for France, Ireland and the Eurozone as a whole. Germany remains a standout, as its youth unemployment rate of 8.2 percent is half of the United States’ rate and a third of the Eurozone’s.

As the Atlantic article states, the unemployment crisis has been dragging on for years now, and there appears to be little end in sight. A “lost generation” of workers will of course mean a lost generation of car buyers for Europe’s auto makers. If anyone is buying anything, it’s low cost cars, as evidenced by the astonishing success of brands like Dacia, which have cannibalized sales of Renault in France.

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India Is The New Home Of Datsun Fri, 22 Feb 2013 18:57:29 +0000

The revived Datsun brand will get its first plant in India. Renault-Nissan announced plans for a new factory in India, and will invest 250 million euros to build the plant.

The factory will be located in Chennai, with capacity for around 200,000 vehicles annually and is expected to come online by mid-2014. The first vehicle produced will be Datsun’s 5000 euro model, followed by an even more ambitious model priced at 3000 euros. Vehicles will be sold in India and exported to  Indonesia and Russia, but the Middle East, Africa and even Europe have been mentioned as possible markets

The 5,000 euro car is expected to compete with lower end offerings from Maruti Suzuki, India’s pre-eminent auto maker. The 3,000 euro car is said to be similar to the Tata Nano – an ambitious exercise in basic transportation that ultimately flopped. Recent estimates suggest that as much as 35 percent of Renault’s global sales come from low-cost cars, specifically the Dacia range.

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In Tough Times, Dacia Is Renault’s “Cash Cow” Wed, 02 Jan 2013 13:00:22 +0000

Renault COO Carlos Tavares may not be exaggerating  when he calls Dacia a “cash cow”. A report in Automotive News suggests that the low-cost marque may be as profitable as some premium brands.

Dacia’s operating margin, according to a Morgan Stanley report, is said to be around 9 percent – closer to luxury brands than mainstream lines. By comparison, Renault is said to have an operating margin of 0.4 percent. With most mainstream auto makers struggling to make a buck, the notion that a low-cost car can be profitable is astounding.

Aside from building their cars in developing countries, Dacia employs a number of strategies to keep the cars profitable and the money flowing. In countries where their products are sold as Renault cars, prices are much higher – a Brazilian Renault Duster will sell for at least 20 percent more than an EU-market Dacia Duster, all thanks to the little badge on the hood.

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Renault Says “Kuss Ummak” To VW, French Unions With Algeria Deal Fri, 21 Dec 2012 14:00:28 +0000

Renault’s Algerian plant became a done deal Thursday, with production beginning in mid-2014, which will see the French auto maker become the sole passenger car builder in the North African state.

The Symbol, a re-badged Dacia Logan, will be the sole vehicle produced in Algeria. French labor unions will undoubtedly be unhappy that their domestic auto makers are sending manufacturing jobs offshore as they cut domestic production, but the economics necessitate production in a low-cost country.

A French spokesman told Just-Auto

“It is a win-win partnership between Renault and Algeria. This model has never been produced in France and never will be. We can’t produce low-cost vehicles in a high-cost country – it doesn’t work economically.”

Meanwhile, French President Francois Hollande praised the deal during his state visit to Algeria on Thursday. Hollande and the French auto industry have scored a massive coup by ensuring that no auto maker can set up a plant in Algeria for three years after the start of production. Volkswagen was previously vying to be the one to set up shop in the country, but lost out to Renault in the end. With Carlos Ghosn keen to establish a foothold on the continent, Renault-Nissan should have a strong head start thanks to Renault, Dacia and the forthcoming Datsun brand, which is also targeting Africa as one of its main markets

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Renault-Nissan Working On Really Low Cost Car Mon, 17 Dec 2012 12:27:31 +0000
Last week, when talking about Volkswagen’s future $10,00o low-cost car, we said that “is rumored to work on something that costs about half.” Guess it is no longer a rumor.  Reuters writes that Gerard Detourbet , the man behind Renault’s Logan program, is in Chennai, India, to work on a real budget car, costing about half of Volkswagen’s targeted price. India is the battlefield for low-cost cars. And that’s not because of Tata’s Nano.

Most of Suzuki’s commanding market share in India goes on account of  cars costing less than 250,000 rupees ( $4,600)  This segment bring Suzuki “1 million registrations a year in a market of 2.6 million,” Reuters says. Hyundai’s inroads into the India market are powered by its 300,000 rupee ($5,500) Eon mini.

Renault’s new “sub-entry” architecture will offer roomier cars for a similar price tag and spawn at least one additional model for Nissan, Detourbet told Reuters.

Despite tanking sales in Europe, Renault recorded a small auto division profit in the first half of 2012, mainly due to its low-cost car program. Peugeot lost $870 million in the same period. Detourbet, a mathematician by trade, helped Renault to achieve the allegedly impossible: How to make big money with small cars.

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Volkswagen Ready To Add Low-Cost Car Brand Fri, 14 Dec 2012 14:31:52 +0000 Volkswagen is making most of its profits with pricey Audis, but it is looking towards making volume with low cost cars. Plans for a budget-brand, reported at TTAC in October, are “entscheidungsreif”,  ready for a decision as they say in Wolfsburg. In January, Volkswagen’s board could give its go-ahead.

A team under former Opel CEO Hans Demand will present plans for a family of low-cost cars, based on China’s new Jetta/Santana, says Der Spiegel. The plan starts with a sedan. A hatchback, a wagon, and a SUVlet will follow. If the plans are approved, Volkswagen will pretty much copy Renault’s Dacia strategy.

Volkswagen will have to sell a lot of cars to make money. According to the report, the break-even point is at half a million units per year. The worldwide market for budget cars is seen at 8 million units per year, rising to over 10 million by 2018.

The cars will be sold under a separate brand. It will be interesting to find out which one Volkswagen takes. Will it follow Nissan’s Datsun example and resurrect DKW? Will it  throw logic to the side, add value and call them Wanderer? Or will a lot of money be poured in to creating a new brand of cheapo cars?

The cars won’t be super-low cost anyway. According to the report, they will cost “less than 8,000 EUR” or around $10,000.  Renault is rumored to work on something that costs about half.

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The Low Cost Car Spotters Guide Thu, 06 Dec 2012 15:59:13 +0000

TTAC readers know that this site has an unhealthy fascination with low-cost cars. It’s not entirely unjustified, what with the segment booming in recession-plagued Europe and the fact that low-cost vehicles are cannibalizing the sales of larger, more conventional vehicles.

To help you seperate your Citigos from your Sanderos, the Handlesblatt (Germany’s version of the Wall Street Journal) has published a handy guide of all cars selling for under 10,000 euro. There’s a delightful mixture of old former-Warsaw Pact crap and very modern automobiles from the EU and Korean. Not to mention a couple Japanese entries. Personally, I’m partial to the Seat Mii and find that Kia Picanto to be offensively ugly.

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Renault’s Quest For The €3,000 Car Thu, 22 Nov 2012 14:00:38 +0000

Renault is gearing up to produce a range of cars positioned below Dacia, including a competitor for the Tata Nano.

French business outlet La Tribune claims that the new models would be built in India and co-developed with Nissan – though no mention was made regarding any relation with the up-coming Datsun range. The vehicles would primarily be developed with India in mind, with a 5,000 euro model positioned below the Dacia Logan (a mid-range model car in the Indian market) and the aforementioned Nano competitor, selling for roughly 3,000 euros. Maruti Suzuki’s lineup is listed as the prime competitor for the cars.

While the Nano competitor would be sold only in markets like India and Africa, the more expensive model could possibly make its way to Europe, despite the logistical and economic issues involved. La Tribune’s source noted that Dacia cars were never intended to be sold in mature markets either.

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Ghosn: Myanmar A “Star”, Europe Not Entirely Lost Thu, 13 Sep 2012 18:48:59 +0000

While Nissan CEO Carlos Ghosn is “preparing for many mediocre years” of European sales, there may be a silver lining for the company.

In an interview with Bloomberg, Ghosn focused on Southeast Asia as the next hot spot. Along with Indonesia and Vietnam, “Myanmar may be the star of future,” he said. South America and Africa were also mentioned, though specific countries weren’t mentioned.

Europe remains Ghosn’s biggest concern, though Ghosn said that “will not see any kind of Armageddon”. With Dacia sales remaining strong, Ghosn has a hedge against Renault’s flagging fortunes – and sources say that Dacia remains the only profitably “low cost” car – the launch of Datsun will be a test of how well Nissan can hang on to their low-cost magic.

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Volkswagen Plans Low Cost Cars Under New (Or Old?) Brand Thu, 22 Mar 2012 11:13:50 +0000

After rumors from Renault and announcements by Nissan, Volkswagen lifted the skirt on its plans for the ultra-low-cost segment. Volkswagen wants to build cars for the €5,000 to €7,000 ($6,600 to $9,200) price bracket, development chief Ulrich Hackenberg told Germany’s auto motor und sport.

For a long time, Volkswagen execs and engineers were horrified by low cost cars. They were worried that this could cheapen a brand that had been laboriously “up-positioned” over many model generations. Therefore, the cheap skates will be sold under a new brand, Hackenberg says.

It is refreshing to see that Volkswagen finally got religion. After many years of trying to sell high priced small cars, Volkswagen now has realized that the key to emerging markets is to sell a lot of car for a low price. Hackenberg thinks of a three box car, “and you can turn that easily into a van. It needs to offer a lot of space.”

It will be interesting to see what brand Volkswagen will chose. It has a lot of dormant brands on file.


Meanwhile in Tokyo, Toyota’s CEO Akio Toyoda emphatically declared that his company will not jump to the cheap car bandwagon.

“To grow sustainably, we need to make a certain level of profit on cars, no matter how big or small they are,” Toyoda told Reuter’s hot shot reporter Chang-Ran Kim today. “When we think about what customers value in our cars, it’s reliability. We won’t risk sacrificing quality simply to meet a certain price range.” While Toyoda was at it, he heaped surprising praise on old nemesis GM:

“Until we overtook them (in 2008), GM was number one, uninterrupted since the 1930s. During that time, it helped the industry develop and created a culture of cars. That’s the kind of company that deserves to be the industry leader.”

Ah, the fine art of homegoroshi, or to praise someone to death.

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