A $4,000 car from GM?

By The Wall Street Journal

General Motors is targeting the emerging ultra-low-cost car market with plans for a compact for around $4,000, possibly producing it in Asia.

The segment is attracting increasing attention from manufacturers eager to keep sales momentum in developing markets following the sharp slide in car sales in North America and Western Europe.

"When Tata Motors in India came out with their $2,500 Nano vehicle, it put a lot of automakers on the spot," said Nick Reilly, GM's new executive vice president of international operations.

Tata Motors started shipping the much-promoted Nano to domestic customers in July, with a base price of just under $3,000, and executives have talked of selling versions of the car in other emerging markets and in the U.S. and Europe.

"We are not going to make cars that cheap because that is really a specific car for a very specific market that has different emissions standards and specifications than markets like the U.S. and Brazil," Reilly said at a media briefing Friday in Brazil, GM's third-largest market by sales, after China and the United States.

"So we are looking at lower-cost vehicles but do not know yet where it will be made or where will it be sold, though most likely in Asia," he said.

Reilly also said GM saw a market for a car that costs around $4,000. With Chinese partners, GM already makes micro-minivans that it plans to export and is looking to expand that product range.

Reilly said that SAIC GM Wuling Automobile will likely sell significant numbers of vehicles outside of China, though not under the Wuling brand because GM doesn't own the branding rights.

Almost two-thirds of GM sales were outside North America in the first half of the year.

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Reilly, former head of GM's Asian business, was chosen last month by CEO Frederick "Fritz" Henderson to oversee all international business from headquarters in Shanghai, in part because of his track record in developing alliances.

"We are getting used to partnerships, and the industry as a whole will see more partnerships forming in 2009," Reilly said, adding that GM wasn't currently looking for partners in other large markets, like India.

The 10 cheapest cars sold in the U.S.:

Model	Price	Model	Price
Hyundai Accent	$9,970	Toyota Yaris	$12,205
Nissan Versa	$9,990	Kia Spectra	$13,550
Kia Rio	$11,495	Suzuki Reno	$13,839
Chevrolet Aveo5	$11,965	Hyundai Elantra	$14,120
Smart fortwo	$11,990	Pontiac G3	$14,335

This article was reported by Kenneth Rapoza for The Wall Street Journal.