globalEDGE International Business Blog

Imagine walking into a car dealership and seeing a brand new car with $2,000 written on the windshield in huge neon letters. It seems too good to be true right? Well in India this actually happens. Tata Motors is an Indian automaker that produces the world's most inexpensive car – the Nano.

India is growing in almost every sector, including the auto industry. One expert even predicted the car market to triple there in the next ten years. This makes it an extremely attractive place for struggling foreign automakers. Renault, a French carmaker, in particular has plans to compete with the Nano. They have recently announced that they are going to release a “competitively priced” car in the Indian market in 2012. It will be designed in India but all of the marketing will still be Renault’s responsibility. Renault is not the only company that is looking to India for new opportunities, Toyota, General Motors, and Ford all have similar plans to compete with the Nano.

So far, the Nano is only on the Indian car market. Tata Motors is scheduled to release the Nano Europa in select international markets in the next few years, but it will be more expensive than the original Nano. It is amazing how this company has kept production costs so low that the price is only $2,000. On top of that, the Nano is extremely fuel efficient. However, we have to keep in mind that India is not one of the world's wealthier nations, so the price of the Nano is actually relatively more expensive than its price tag indicates. Still, it gives us hope that auto manufacturers around the world will make strides to keep prices low as well. The Nano proves that it can be done.

It is well known that the auto industry has taken a hit across the globe. With sales and production down and several plant closures, it seems that things are looking grim. However, several Japanese automakers are thriving, not internationally, but in China.

The preferred way of travel for long distance travel among those in the business field has been by air. Flying takes less time and is more convenient than taking a four hour train trip to the desired destination. However, flying has its disadvantages as well - lost luggage, taking taxis to and from airports, etc.

In Spain however, taking the train from two main cities - Madrid and Barcelona has become very popular since the opening of Alta Velocidad Espanola high-speed service. This rail service provides the same luxuries as a plane - breakfast, newspaper, and comfort; however, it is a faster journey than flying. This improvement in high-speed rail has shifted most travel in Spain from air to rail. Even though Spain joined the high-speed rail industry later than other countries, it has become one of the top leaders in it - right after Japan and France. Furthermore, it has brought more tourists to Barcelona and Madrid which has been a boost to business there. Also, the success of this project has been noticed from other countries. For example, there is a proposition in Britain for a high-speed line between London and Glasgow. Moreover, in the U.S., there is a proposal to invest $8bn in high-speed rail.

In conclusion, high-speed rail in Spain has been a huge success, as it has enabled railways to take market share from airlines and has been promoting economic development. It also promotes competition in the travel industry and stimulates innovation in other countries as well. 

If the norm at the moment is that countries don’t want to invest in other countries due to the economic downturn and volatile markets, then the exceptions are Qatar and Germany. Currently, the country of Qatar is looking to invest heavily into the exporting powerhouse, and they have the money to do it. As of 2007, Qatar has attained the highest per capita income in the world, primarily through the means of oil and natural gas revenues. So what interests Qatar so much about Germany?

Surprisingly enough, Qatar has its sights set on Germany’s auto industry. The oil giant is primarily concerned with the German brands Volkswagen and Porsche, brands which are very numerous and very popular in the Arab world, especially in the country looking to invest, which had an $80,900 GDP per capita in 2007.

Gas prices have been fluctuating in the past few weeks without following a certain trend. The volatility is minimal however, when compared to last summer's record-setting high prices. Many people started using public transportation more often, or buying more fuel efficient cars. Others looked toward hybrids. This increased the pressure on car companies to produce zero-emission vehicles at an affordable price. Nissan was one of the companies to rise to the challenge. Spokespeople for Nissan express confidence when saying that their new electric car will sell exceptionally well because it is what the consumer wants.

One of the more interesting subplots of the environmental movement that has popped up lately is the potential of lithium-ion batteries to replace gasoline in automobiles. Lithium-ion batteries are lighter, more energy dense, and lower-maintenance than some of their more conventional counterparts.

For three and a half years Porsche tried to take control of the much larger Volkswagen. Finally they gave up on that idea and agreed to a merger instead. This merger is supposed to create an “integrated leading company” which will include VW’s nine brands and Porsche. However, details about the merger are not clear and many believe the deal will end up falling through. Furthermore, after years of quietly buying up shares of VW, Porsche now owns over 50% of the company. These share purchases increased Porsche’s debt levels, and the company is now beginning to show some signs of financial strain.

How can a used car be worth more than a new car? How can a car increase in value the second it is driven off the lot? The answer is that these events only happen in Venezuela. The UICIFD Blog recently had a post about this strange phenomenon in the Venezuelan car industry. 

Be sure to check out our blogroll to read other great blogs.

“Bailout” has become an all-too-familiar word as of late, but a Russian auto industry bailout brings an interesting (though not entirely positive) twist to the dreaded word. The goal of this particular bailout is aimed more at social stability than in creating a leaner and more competitive industry for the future. The Russian bailout will focused ensuring employment of autoworkers by avoiding layoffs - in spite of plummeting demand.

A few days ago, Tata Motors of India introduced the commercial version of the Nano, a tiny ten-foot-long five-foot-high compact car which the company hopes will revolutionize transportation not only in India, but in other parts of the world too. The car will sell for roughly 100,000 rupees ($1,979; £1,366) and goes on sale next month.