Honda won't compete for ultra-cheap car

Tata’s groundbreaking Nano minicar has garnered much of the world’s attention because of its extremely low price tag (just $2,500), but it also managed to capture the attention of a number of mainstream carmakers who hope to use it as a model to develop ultra-cheap cars of their own. Some carmakers, however, won’t be competing in the newly formed budget segment. Despite its strong presence in the Indian market, a place where ultra-cheap minicars would thrive, Honda has announced it will instead focus on promoting safer and greener vehicles.

The information comes from Honda boss Takeo Fukui, who told reporters from Zee TV that “Honda will not make cars at such a low price.” Fukui claims Honda customers are more likely to pay extra for safer vehicles, “whether it is the Indian or the Chinese market.”

These latest comments is good news for environmentalists who fear a sudden surge in the number of cars on the road will simply cause more traffic and add to choking pollution. Foreign carmakers are rushing to get a foothold of developing markets to help drive growth amid predicted sluggish sales in more established markets such as the U.S., Western Europe and Japan, and the key to doing this is developing affordable vehicles. One of the first foreign makes to launch a rival to the Nano will likely be Renault-Nissan, which hopes to have its ultra-cheap car on the market by 2010.