Basic transportation with a momentary PS3 effect

The Tata Nano is not a good car, but it is a car, and a serviceable one at that. Most importantly, it is basic and extremely cheap; $2,500 when it first went on sale, a quarter of the price of the typical economy car for sale in the states. It was built to provide the millions and millions of lower and lower middle class in India the opportunity to cross the threshold from dangerous family motorbike to much safer family car.

This is a great idea, but it hasn’t gone perfectly smoothly. Due to production delays, Nano supply falls well short of demand, so a “PS3″ effect is kicking in for many who won the lottery to purchase the initial batch of Nanos. When the PS3 was launched, many waited in line to buy it so they could quickly flip it on eBay and make a tidy profit. This is going on with the Nano now, and people are paying far more than $2,500 for the car, a price the company slaved for years to achieve. Instead of families upgrading from bike to car, richer elites are buying up the car as a Prius-like status symbol; a novelty, not a necessity.

But this should pass once Nano production hits its second or third winds, and when you add the possibility of taking out a microloan from Grameen to purchase a Nano, poorer Indians will be moving up, possibly in the millions, in good time. The cheap no-frills transportation for the masses is hardly a new idea, but it is an nonexistent one in the Western world in this century. The cheapest new cars cost $10,000, and there’s no getting around it. Which is a shame, because a lot of Americans who need cars and have a little bit of money to buy one don’t have that much to spend. So they buy used cars or no car. In our economy, and with our safety standards, a Nano exactly like the one in India would be impossible in America or Europe, so they’re making a safer, more robust version that will likely cost more.

But if they can still get it here for well under $8,000, they may have a winner, and do something Volkswagen hasn’t done since the original Beetle ceased production: build a real volkswagen.