http://192.168.2.6/english/小型车的巨大市场前景.rm

Well, it's no secret the American auto sector is fueling the heat-increased competition, Americans' souring on American cars, the list goes on and on. But there’s definitely a bright spot in Detroit’s future, in developing markets. Call it the new car Ka-Ching. Phil Lebeau is on the Money.

They may be small and cheap, but these cars are becoming big business for automakers, especially overseas. In Europe, Renault has sold more than 400,000 Logans, at 75 hundred dollars a pop, which has car watchers wondering if the Logan is the way of the future.

The Logan at this point is a cheap car for Europe, and it’s produced in the eastern block. It undercuts a lot of other European cars by about 30%, and it’s a very good effort, because it’s produced by a serious car company.

Renault CEO Carlos Ghosn would like to ultimately sell an entry level car for 2500 dollars, which is the same price India’s Tata motors has set for its people’s car, coming out in late 2008. With middle classes booming in India and China, Renault and Tata are trying to capture first time car buyers. So why are the big three doing the same thing?

After all, GM is testing out mini cars, it may eventually sell. The problem is, little cars have little profits.

It isn’t very profitable, so if you take a look at the profit that GM would make selling a Cadillac Escalade here, they would have to sell about anywhere from sixteen to seventeen of those small cars to equal the profit that they would get on one Escalade.

While these small cheap cars may be the future in developing countries, don’t expect to see them on the streets here in the states any time soon. That’s because with the labor costs as high as the iron here in the US, it doesn’t pay for automakers to make a car that sells around ten grand. And memories of the Yugo could keep people from wanting to take a chance on a really low-price foreign-made car.

So, for now, these tiny cars that are a big deal overseas will likely stay overseas.

On the Money, Phil Lebeau, CNBC, Chicago.

Phil Lebeau is on the Money.
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