Can a $4,000 Car Help to Cure GM? (TTM)

By Douglas A. McIntyre Updated Mar 26, 3:26PM EDT · Published Aug 17, 11:03AM EDT

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General Motors may be closer to getting into cars as cheap as some go-carts. A report over the weekend in the WSJ noted that GM plans to produce one of the compact cars for $4,000.00 in Asia. While few details are known, this follows a similar move back in early 2008. Tata Motors (NYSE: TTM) began a sub-$3,000.00 car via the Tata Nano for close to $2,500.00, and this looks to be a continuation of that move.

This car probably won’t be on US highways. It sounds a lot like the car for many of the congested Asian markets that don’t need to worry how bad the driver and passengers fare in a 40 mile per hour head-on collision.

There is also the notion of emissions coming into play that would keep these cheap cars. If you pay $2,500.00 to $4,000.00 for a new car, regardless of which market you are in, how much is going to be spent on the emissions systems?

But there is a real question on these cars for auto makers to consider. How high are the margins on dirt cheap products? Even if these cars are made of recycled beer cans and plastic, there is only so much profit that can be nabbed per unit and the “make it up on volume” has to consider the size of able-bodies adult workers that actually have the need and space for a car regardless of price. For a comparison of just how cheap this really is compared to the US market, this is cheaper than most ATV’s and motorcycles.

There is a market for these cars in many of these emerging economies. They are called Tuk Tuks…..

Jon C. Ogg
August 17, 2009

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.