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Chump change: The world’s cheapest cars

Image: Tata  "Nano" car.
India-based Tata Motors says the Nano will roll out later this year. Price tag? About $2,500. The four-door will be the world's cheapest car.Vijay Mathur / Reuters
/ Source: Forbes

In the market for a no-frills car under $10,000? Pack your bags. For that price, you've got to travel to emerging automotive markets like India and China.

The Tata Nano is the latest entrant into the cheap-car club. India-based Tata Motors says the Nano will roll out later this year. Price tag? About $2,500. The four-door car will be the world's cheapest car, besting India's current cheapest vehicle, the Suzuki Maruti 800, which sells for 195,000 rupees (about $4,994).

The Maruti is the cheapest in India for now (195,000 Rupees; $4,994). It costs only slightly more than the Chery QQ, which is produced in China by Chery Automotive and sells there for 34,499 yuan ($4,781). None of these vehicles are available in the United States; they are barred from entry in their current conditions, because, like the Nano, they don't meet U.S. safety and emissions standards.

"They are cars, but they are a step up from a motorcycle," says George Magliano, director of automotive-industry research for North America at Global Insights, a market research firm. For many, though, "It is the difference between walking and driving a car."

We searched the globe to find the world's cheapest cars. Along with the Tata Nano, Suzuki Maruti and Chery QQ, we found the Geely MR sedan, the Geely HQ SRV SUV and the Chery A1 sedan in China. Rounding out the top 10 are the Hyundai I10, Tata Indica, the Fiat Palio and the Renault Dacia Logan. All are sold in India; the Renault is also distributed in Romania.

The Maruti, a five-door hatchback, produces 37 horsepower and runs on 12-inch wheels. Four people, including the driver, can comfortably sit inside. Its top speed is 78 miles per hour and it can get 47 miles to the gallon.

The Nano is about 10 feet long and five feet wide. The two-cylinder gas engine delivers 33 horsepower and a top speed of just over 60 mph. The basic model has no radio, air-conditioning or air bags, but it does have seat belts and a catalytic converter to reduce air pollution and gets 50 miles to the gallon. It meets all safety and emissions requirements in India.

What's more, the Nano may open the door for middle-class families in India to get behind the wheel of a vehicle for the first time, says Cody Lusk, president of the American International Automobile Dealers Association.

"That's what is happening globally," says Lusk. "There is a lot of interest and excitement that the middle class in emerging markets can get in a motorized vehicle."

U.S. consumers may feel left out, but Lusk says there is a big difference between "inexpensive and cheap." He recalls the "Yugo experiment" in 1985, when entrepreneur Malcolm Bricklin introduced to the U.S. market a low-cost vehicle built in Yugoslavia. It has the infamous distinction of being one of the worst cars ever sold in the U.S. It lacked safety features and was poorly constructed.

China manufacturer Geely Automotive tried to woo U.S. buyers with its products, which include the Merrie hatchback, a couple of years ago, but "it was not ready for prime-time," Lusk says. "It failed to meet U.S. emissions and safety standards. Geely would have to restructure and rebuild the vehicles to meet our specifications. The vehicles were less than overwhelming."

The Chevrolet Aveo, which has a base price of $10,895, is currently the cheapest car available in the United States. But two Smart ForTwo models will be nipping at its heels this quarter. That's when USA Distributor, a subsidiary of Penske Automotive Group, will begin selling the entry-level coupe for $11,590.