How The World’s Cheapest Car Is Bad For Your Wallet
India’s Tata Motors just unveiled its 100,000 rupee car today. According to today’s exchange rate, that works out to $2,551. Its a small car, with a 624 cc engine and seats 4 adults comfortably. (If you’ve ever sat in a rickshaw, you’d have a slightly lower standard of comfort).
![[Tata Motor's Nano: The World's Cheapest Car.]](http://www.livingoffdividends.com/wp-content/uploads/2008/01/nano.jpg)
This is good news of hundreds of millions of Indians who currently drive scooters and motorbikes and can now afford a car. The Nano costs about twice as much as a mid-range bike does. So you can expect it to wildly popular, especially in India and South East Asia.
Even though its very fuel efficient, at 76 miles/gallon in the petrol version (diesel version is expected to give you 92 miles/gallon) compared to the 195 miles/gallon you’d get from a scooter (& more from some bikes), its a rather large step down. This means that India’s consumption of oil is set to increase.
According to Peter Schiff’s Global Investor Newsletter:
In 1900, we Americans were using one barrel of oil per person annually. By 1970, we were using 27 barrels per capita. At the end of World War II, Japan was using 1 barrel per person. By 1970, they were using 17. Today, China uses 1.3 barrels per person annually and India uses .7. The increased demand this similarity infers is staggering.
The standard of living for millions of Asians has been increasing dramatically over the past few years. The per capita consumption of oil is going to rise significantly as these people buy more cars and goods. If you believe that we’re at peak oil production already, this means that there is going to be a severe shortage of oil over the next years, which should lead to higher prices. Higher oil prices led to higher inflation.
According to Bloomberg, option traders are speculating that oil will hit $200/barrel in a year. While I think this is a long-shot, oil prices are likely to keep heading higher.
Oil is currently trading around $100/barrel. Why oil at the pump costs the same as when oil was $60/barrel is a bit of a mystery. Maybe the upcoming election has something to do with it? I really don’t have a clue. But so long as my Canadian Income Funds keep producing, I’m happy!
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January 10th, 2008 at 5:35 am
I think this is great. The faster we burn up the world’s supply of oil, the faster we will find an alternative fuel source.
January 11th, 2008 at 1:53 am
Good article. I saw this on the news last night and the media had not caught on to your angle yet.
If they could get this car selling in North America then the demand for oil may balance out…slightly. I agree with you, it will hurt us in the long run. The population of India is scary.
If they get a deal with the Chinese, it will even be worse!
The Mad Ape
January 14th, 2008 at 2:07 am
[…] Off Dividends presents How The World’s Cheapest Car Is Bad For Your Wallet .It might be bad for your wallet, but I’m not sure that there’s anything you can or […]
January 14th, 2008 at 11:19 am
I don’t have a car at all, which is *great* for my wallet. However, if gas prices go way up due to peak oil, I will still be affected. Everything I buy that is shipped by truck or air will become more expensive, little by little.
January 15th, 2008 at 8:05 am
Why are you blaming India for all your troubles?
“The per capita consumption of oil is going to rise significantly as these people buy more cars and goods.”
“These people” have as much right to buy oil as you do.
January 15th, 2008 at 10:47 am
Ash,
obviously you’re not a regular reader of this blog.
If you were, you’d know that I’m happy whenever oil prices are going higher. i’ve positioned myself to prosper from this trend. I have infact mentioned this in the last line of the post.
maybe you should improve your reading comprehension skills before passing judgement?
January 16th, 2008 at 6:42 am
Carnival of Everything Finance: # 11 Edition…
Welcome to the January 16, 2008 edition of Carnival of Everything Finance.
We had over 80 really good articles submitted for this edition.
Editor favorites have “*” on them.
Earning Money
James D. Brausch presents Intern Program Tips posted at ja…
January 16th, 2008 at 9:37 am
Bad for your wallet? Reduce your oil consumption then.
In all fairness, I believe everyone has the right to own a car and if someone else can now afford buying something which I was fortunate enough to be born with, I can’t bitch about it (like half of the world is doing).
Did you know the US is responsible for more than 50% of the world’s oil production?
Just imagine, the US consuming 50% oil, and the rest of the world including India and china (with their massive populations) sharing the rest.
So who’s responsible for the oil prices now?
Oh well, keep on bitching … it changes nothing unless you realize where the real problem is.
January 22nd, 2008 at 4:58 am
[…] OFF DIVIDENDS presents How The World’s Cheapest Car Is Bad For Your Wallet posted at LIVING OFF DIVIDENDS, saying, “India’s Tata Motors is making the […]
April 26th, 2008 at 11:50 am
I’m not buying another car until the AIR CAR come on the US market. WHERE’S MY AIR CAR? I’m waiting…
If we’re throwing around blame for the oil shortage, who do we blame for the fact that we had Hondas on the road in the 1980’s that got over 55 miles per gallon, but 20 years later we can’t buy a cheap gas buggy with nearly as high mpg? Who is responsible for fuel economy standards in the USA? Blame them.
May 2nd, 2008 at 7:59 am
Don’t think is a good idea. Here is my perspective, right now most first world countries governments advice people to use mass transit. China, India and third world country are just being introduced to individual wealth were people are able to afford cars. Right now most of these people are using mass transit or car-pooling. So, if tou introduce these tiny cars again, is like your telling these people that they can own their own cars and at the same time these areas are over populated. At the end of the day, we are back to square one. We should stick to the same cars we have know, just educate people instead of sending a wrong message to the third countries.
June 26th, 2008 at 10:16 pm
i think it is okay for all of us. it is a good family car. there should be restriction on cars but not on this one. the ones that should be restricted are the everyday cars that are being used only by one person and has a 1000+ cc engines.
June 28th, 2008 at 9:11 am
Wait unil you see this car driven by compressed air.
All your comments become moot. Check this out
http://evolution.loremo.com/
Subject: Fw: AMAZING AIR CAR FROM INDIA