Can Tata Motors' $2,500 Car Drive the India ETF?

The India market and the exchange-traded fund (INP) that tracks it are having a hard time lately due to high valuations and rising interest rates. But India continues to fascinate due to its huge potential highlighted by Tata Motors (TTM) plan to introduce car which could take a place in history alongside Ford's Model T, Volkswagen's Beetle and the British Motor Corp.'s Mini, all of which put a set of wheels within reach of millions of customers after they rolled onto the scene. Tata Motors is developing a car it aims to sell for about $2,500--the cheapest, by far, ever made. Wow. Ten cars for $25,000. This will make even Hyundai sweat bullets!

As an article in Forbes points out, the changes at Tata Motors are coming as India itself is transforming. With economic growth charging along at 9% last year, more and more Indians can afford cars. But on the highway from Mumbai to Pune, the new cars zoom past wooden carts filled with construction materials and pulled by ponies, camels, elephants or even people.

A key indicator of probable success is that workers at the Tata Motors factory have been trained in Japanese manufacturing techniques that call for continual improvements. Now India has to welcome with open arms private investment in infrasructure like roads to support the millions of new cars that will soon hit the streets.

Comments

[sacsharma]

It is a double whammy for Tata Motors-Rising rupee is hurting exports and rising interest rates are affecting the sale of cars and commercial vehicles.

Sachin
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