MUMBAI, India - Tata Motors' ultra-cheap car will be the least polluting vehicle on Indian roads, the company's chairman said Monday, refuting criticism that the $2,500 car would add to traffic chaos and carbon emission.
Ratan Tata said his company will bring what is being billed as "the people's car'' to market next year and its price of around 100,000 rupees would be on target, despite a sharp rise in costs for steel and other raw materials since the project was announced three years ago.
Automakers from around the world are keenly watching progress in the Tata project, which analysts say could set new price benchmarks and force other manufacturers to follow suit.
But Tata has been criticized by environmental groups who say the attractive price tag would bring the car within the reach of millions of ordinary Indians, triggering more pollution and burdening the country's crumbling infrastructure.
Tata said his car will adhere to strict quality norms like any automobile in the developed world, however.
"We will have less pollution per vehicle than any other vehicle in the country today,'' Tata told The Associated Press.
The pollution levels will be close to that of two-wheelers, he said.
He acknowledged there would be more congestion, but said the answer lay in building more infrastructure rather than ask auto makers to roll back production.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said a small car with a small engine is likely to pollute less than those with larger engines.
But a clean car in India likely would not meet U.S. Environmental Protection Agency pollution limits, he said.
"Most of the developing countries, their emissions standards are just sort of getting cranked up now. The baseline is not very difficult to surpass,'' he said.
Tata said he was curious why his low-cost car that caters to the aspirations of average Indians was being criticized.
Earlier, there was skepticism that the company could stick to the price target and now it is facing "flak for a different set of reasons,'' he said. "Damned if you do, damned if you don't.''
India is among the world's fastest growing automobile markets, thanks to a booming economy that has boosted middle class incomes and boosted demand for cars.
Initially, Tata said his company plans to make between 250,000 to 500,000 units a year. While the base model will cost 100,000 rupees, the company will offer two more variants at a higher price with added features, he said.
Keeping fuel usage flexible, including the use of ethanol, was also being considered, he said.
Even with low labour costs, it's unlikely that Tata could produce a $2,500 car with the catalytic exhaust technology needed to make it super-clean by U.S. standards, Cole said.
"I don't think that would be achievable very easily,'' he said. "Unless the $2,500 car has pedals inside.''
The project has also spurred other global automakers to explore similar ventures.
Already, French auto maker Renault SA and its Japanese partner, Nissan Motor Co., are trying to determine if they can sell a compact car for less than $3,000. Japan's Toyota Motor Corp., South Korea's Hyundai Motor Co. and Chinese auto maker Chery could also be looking to make ultra-cheap cars in India, analysts say.
According to German auto consulting firm CSM Worldwide, the new car could help Tata Motors emerge as the country's largest manufacturer of cars and light trucks by 2013.
Long a giant in truck and bus manufacturing, Tata has only about a decade of experience selling cars, which are limited to a handful, but successful, models. In India, it trails South Korea's Hyundai Motor Co. and market leader Maruti Suzuki Ltd., which is controlled by Japan's Suzuki Motor Corp.
Besides the ultra-cheap car, Tata said the company will introduce several new models next year, most of them in partnership with Italian auto maker Fiat.
