The burgeoning middle class has another reason to smile following Ratan Tata’s announcement that Tata Motor’s shall roll out a “1-lac low assembly’ vehicle by the end of this year. Facing skepticism from all sides TATA remains undeterred, much to the liking of the Indian public, eagerly awaiting the grand reveal. Now before being biased and judgmental on the feasibility of this proposition we must try to understand whether doing so is possible or not.
Taking cue from Reliance, which offers the supply of premium quality goods and services to its customers at reasonable prices, TATA is going to get this dream machine to the Indian public. The solution for providing cost effective services was right under our nose, all the time; removing the middle men. In the extensive supply chain from the manufacturer to the naïve customer, apart from value addition along each step in this chain, every subsequent stage encounters an appreciation in the value of the finished product. Although, TATA shall maneuver its way around these middle men ensuring a low cost automobile, it will guarantee requisite safety standards.
The other cost-cutting strategies are intensive use of plastics on the body of the car and a very low-cost assembly operation. Extensive experimentation on the mechanics of the car including the CVT(Continuously Variable Technology) which means that there shall be no use of gears, is also planned. For the design of the car the company has taken help from the Italian car design house IDEA.
The Indian automobile sector is waiting with great level of anticipation, and they are definitely not to be blamed. With the cheapest cars such as the Maruti 800 costing Rs 1.7 lacs, manufacturing a car for a retail price of 1 lac, keeping in mind minimum profit, would mean approximately Rs70, 000 for its cost price. However, this doesn’t mean that it will be a no- frills car. Moreover it would have a seating capacity of 4-5 people.
The Indian middle-class man could not ask for more. Salvation from the drudgery of dragging around a two wheeler, running for shelter during rainstorms and apart from that, the luxury of legally traveling with four passengers. TATA is definitely not out there to reinvent the wheel. It’s an earnest effort to cater to the wants of the Indian public.
It’s high time the Indian automobile sector experiences a revolution and more importantly, one which would actually trickle down to the common man, affecting his everyday life, giving him luxury and comfort which he never dreamt he could afford. It’s high time that the world’s automobile market steps down from its high pedestal thinking, associating fast cars with the rich and famous. Its time for redemption and if Ratan Tata is willing to be a true people’s person then nothing could please us more. For if his endeavors result in a higher standard of living, which could set model for us Indians to think big, then so be it!
Amanjit Singh Khanna