Tata's new 'Nano' and what it means for everyone

Tata, on Jan 10, unveiled its new 1 lakh car (Rs.1,00,000) - the 'Nano' - at the Auto Expo 2008 in New Delhi. The expo was touted to be Asia's largest, but it was Tata's magic car which was the talk of the town. Two days earlier Bajaj(maybe soon with Renault) had revealed it's own small car to cost 1.2-1.4 lakhs - and a host of other companies including GM and Ford announced their intentions to build their very own small car.

What makes Nano so special is that it will costs just $2500 at the dealership - which is trivial change compared to the cost of a car in the US or under half the cost of the cheapest car on Indian roads. This means it is well within the reach of the average Indian consumer who has a family of 4-5 and owns a two wheeler, who is the intended target. Tata's chairman, Ratan Tata, has said that the car was for every Indian family, and pooh-poohed talk of environmental concerns. Dr. Prachauri, of the Nobel-Prize winning Intergovernmental Panel on Climate Change (IPCC), said he was having nightmares because of the same - many foreign reports too indicated the same - but Ratan Tata said it has a great mileage(over 20 km/litre, which is great), followed pollution norms and also passed safety tests.

The car may not have many features which are standard in many countries - like power steering, ABS and air bags - but we have driven cars without these features all along - so this won't be something new. It may be funny to note that it has it's engine at the rear, has storage just enough for one suitcase and has just one windshield wiper - but that a car is within reach of the common man is a great achievement - this car might go down in history as one which changed the scene of an auto industry like the T-Ford and the Maruti 800. Given the choice to buy a car for just 1 lakh or a bike which costs 40k-50k, many would make pick the car. It would be more comfortable - no need to balance the entire weight of the family - kids can safely sit down in the back - no need to hang on in front of daddy or be squashed between him and mummy - no need to worry about the weather - rain or sun - it would be a great step forward.

This car stands to truly revolutionise the auto industry with a car every consumer can afford, especially in the developing nations where the incomes are low. One glance at the possible markets for this car and you will see that the opportunities for this vehicle are huge - Africa and Asia, let alone India and China - this car can capture the imagination of people and become an instant hit.

This car means a lot to India - yet another feather in the cap of the Tata group - TCS - Daewoo - Corus - and the expected Jaguar and Land Rover. If this car is manufactured in India and exported, it will establish India's image as a car 'exporter' with value and will generate a further lot of employment, much like the current auto industry is doing. The impact on the world's auto industry is to be seen, because the cheapest cars are nowhere near this price tag. It could lead to cheaper cars being manufactured around the world to meet demands in the rising economies of South Asia, Africa and South America.

However, with the smiles there will be worries too - first and foremost the infrastructure worries. One question asked by a journalist impressed me but it was the reply which impressed me even more - he asked Mr. Ratan what he had to say about the fact that it took him over an hour in traffic to get to the expo - Mr. Ratan's reply was timeless: did you get late because of our cars?(This is a rough transcript, I can't find where I read it) India's roads are already clogged with traffic, not to mention unmaintained roads and the rains to play spoilsport. More cheap cars and it is an urban planner's nightmare. Places like Bangalore are not able to cope up (they could follow Hyderabad's example, but for all that there needs to be a government in Bangalore in the first place) with the current traffic and narrow roads and existing buildings and legal issues make things worse. Yes, the government has to take an active part in constructing new roads and improve traffic conditions in the cities.

I remember when Mr. Tata had announced his 1 lakh car some four years back(see... it still costs 1 lakh.. "A promise is a promise" - Ratan Tata), we were having a discussion about new cars and the government's policy. My views were that for countries like India and China with very high population densities, the policy should be one of mass transport and not individual transport. Rather than encouraging new cars on the road, it should tax them further and encourage people to use modes of public transport, which too need to be developed. A very simple example to quote, from my experience, is that in places like Erode, Salem and Namakkal, many businessmen travel a lot by bus - because there it is reliable, cheap and on time. Of course there is the argument that an auto industry will generate employment and help industrialisation. Again, environmental concerns pop up - burning fuels will reduce drastically if public transportation is used - so will traffic congestion.
I have my own safety concerns for the car - with a rear engine, braking will be a problem - so will oversteering and understeering - because the centre of gravity of the car will tend to be at the rear of the car. Also, one main reason why cars have front engines - 'impact zone' - will be absent, so the safety of the car, even though it claims to have passed safety tests, is a major question. Instead of all welds, the car is also held together by superglue. Given the stripped down version of all the components, wear and tear is sure to be high - which will be even more if driven at higher speeds - so one fear is that running costs will be on the higher side compared to a normal car. Given the current rate of action at the top levels of bureaucracy, it looks like owning a car will be easy, but driving it with the same ease will definitely need another Ratan Tata in politics.

But given all the ups and downs, nothing can replace the joy of a family being able to afford a car, long seen as a luxury item all over the world, and drive around in comparable comfort, safety and self pride.

Referenes: 1, 2, 3, and others in Google News I can't trace