Big Things Come in Small Packages

tata.jpgIndia’s ninth Auto Expo has been grand this time – it is said to be twice the size of the Tokyo Motor Show. International companies have marked their presence in the Indian market and twenty new cars are expected to be unveiled this time. And yet, the show stealer was India’s own Tata Group’s revealing of the cheapest car. Tata Nano, the small, no frills, low cost car was unveiled with much grandeur and it has created waves around the globe.

Tata Group’s confirmation of the price of the car as really being Rs. 1 Lac has left many surprised. It was thought as impossible to be able to create such a low cost car and many people were shocked that Tata’s claim about the car’s pricing was not just false hype. All had expected the car’s pricing to be much higher.

London-based auto analyst Ashvin Chotai believes that the bulk of the sales will be from the deluxe section which will be fitted with air conditioning. The attention given to the release of this car has been phenomenal. Scores of journalists, VIPs and industrialists were present at the unveiling. The masses, too, have appreciated the Nano greatly. All the initial criticism was forgotten and almost everyone left the Expo with the car having driven right into their hearts. Ironically, the shares of Tata Motors fell to 2.8 percent after having risen to more than 4 percent.

There also has been a varied response from the American public with half of them expressing their desire to buy it due to its cost effectiveness and the other half refusing to ever own it. Nano is priced at $2500 which is lower than the average American income. However, much has been speculated about whether this car was to find similar demand in the other developing countries. Chances do seem high that this low cost vehicle would find accessibility in other nations as well. However, as of now, Tata has expressed its desire to seize only the Indian market.

It seems that many are finding the bitter pill of a Rs. 1 Lac car hard to swallow. There are fears that such a car would take away the sense of elitism that comes with the ownership of a four wheeler. They feel that there would be no sense of “achievement” anymore in owning a car. However, I feel such an argument is completely baseless. The elitist value of having a car had vanished ever since the mass production of cars had started. It was a matter of pride when one finally got a car after having to wait for several years. Now, with relatively easy loan options and so much choice in the market, the four wheeler vehicle has gotten relegated to a necessity. Importantly, now the focus will shift from whether or not a person owns a car. It will be more important to know which car the person owns. Obviously, the entry of a low cost car is not going to mean the end of the luxury car segment. Furthermore, an important trump card for Tata will be the tag of inclusive growth. It is paving the way for prosperity benefiting all. Even the common man can now take advantage of technological advancements. This out-of-the-box strategy of the Tata Group finally moves beyond the Congress’ chant for the common man’s need of necessities being only roti, kapda aur makaan. If this car becomes successful after it’s launch into the market, it will surely show that the common man’s needs constitutes much more than just those three above mentioned…

Nano has also been earmarked as a “disruptive innovation”. This means that the revolutionary car will be changing some competitive benchmarks and it will throw some existing players out of the field. However, the other automobile companies do not seem to be wishing to reveal their anxiety. Mr. Jagdish Khattar, former managing director of Maruti Suzuki, feels that the car is in between the 2 wheeler and the Maruti 800. The Managing director of Mahindra and Mahindra LTD felt “delighted (that) an Indian company is leading the way.” P.Sam, Yamaha’s Group Head of Marketing and Sales felt no threat from the 1 Lac car as their customers would continue to buy their cars for the “sheer joy of driving”. However, undercurrents can indeed be felt that the companies do feel threatened. Bajaj recently announced it plans to also build a small car in alliance with Renault in about two to four years time. More such announcements from other global carmakers also seem imminent.

Apart from the environemental concerns, there have been major debates over the safety and comfort level of the car. The design of the dash board and the positioning of the engine at the back, call for reconsideration of the viability of the car. There is no hand brake and the metal is also thin and light so as to facilitate higher speed. It is not comfortable for long drives as comfort has been compromised upon. The interior are not very attractive due to the use of cheap material in the upholstery. All these shortcomings can be attributed to the low cost requirement kept by the Tatas. The pick up is also quite slow and the maximum speed that it can gain is only 90 km/hr. It is felt that the car may not be too popular with the youngsters.

All of this is merely speculation. Actual conclusions can only be made after the car is launched into the Indian market and is tried and tested by the public. As for now, it looks like the small car is set to become the next big thing.

Shravya Jain

Content Team – Vibhuti Rathore and Himadri Agarwal