Tiny Tata Nano Car, Big Threat

There’s a good reason why chief U.N. climate scientist Rajendra Pachauri, who shared last year’s Nobel Peace Prize with Al Gore, says he’s “having nightmares” about India’s newest automotive innovation. It’s not because the Nano from Tata Motors, which was introduced last week, makes the boxiest hatchbacks from the ’70s look sexy. It’s not because the car lacks air conditioning in a country where the heat can be paralyzing, nor because its 2-cylinder engine can barely manage 60 mph. It’s because the vehicle’s tiny price tag — about $2,500 — will make car ownership possible for millions of Indians, which could well render the rest of the world’s efforts to combat global warming moot.

Currently, only about 12 in 1,000 Indians have a car, according to the United Nations. In the United States, the ratio is 765 cars for every 1,000 people. What happens if, through a combination of its incredibly rapid economic growth and innovations like the Nano, India’s car-ownership ratio hits that of the U.S.? That would put 864 million cars on India’s roads, more than 3 1/2 times the number in the U.S. It wouldn’t happen for several decades, if ever, but the same phenomenon is occurring in China, which has an even bigger population. The International Energy Agency estimates that the number of cars in China will increase sevenfold, to 270 million, by 2030.That’s a scary prospect. Light-duty vehicles account for about 10% of global carbon emissions, and that number is going to rise quickly as more Indians and Chinese get behind the wheel.

Indians, of course, have every right to enjoy the newfound freedom and status that comes with owning a car. There is nothing the world’s environmental community can or should do to interfere with the rollout of the Nano. Yet it does point up the urgency of developing technological alternatives to the internal combustion engine and the burning of fossil fuels.

If there’s a silver lining in the Nano cloud, it’s that the free market could help solve the emissions problem. Prices for gasoline will probably keep rising as millions of cheap cars hit Asian roads. That will spur research into alternatives and discourage people worldwide from buying low-mileage cars. It’s even possible that gas prices in India might rise to the point that those who could afford a Nano wouldn’t be able to afford the gas to fuel it.

American automakers should take heed. Judging from the models being unveiled at this week’s Detroit Auto Show, consumers can expect more of the same gas-guzzling vehicles in showrooms this year and next. Detroit isn’t entirely to blame because it takes years to produce new models, and soaring gas prices are a relatively recent phenomenon. But carmakers considering their future lineups would do well to phase out the Navigators for something more Nano-sized.

Nano as taxi? Mumbai drivers all geared up

Think Mumbai, think black and yellow Fiat taxis. For decades now, the trusted Fiat has helped Mumbai get around be it day or night, with the friendly taximan always just a wave away.

But the cabbies now want a change for the better. With the Premier Padminis no longer being manufactured, they are looking forward to the Tata Nano hitting the roads.

“Majority of them (drivers) are anxious and have enquired about this vehicle because there’s no other viable option,” says President, Mumbai Taximen Union, A L Quadrose.

The drivers are more than happy. “It’s cheap, it looks good. Who wouldn’t want it?” says a driver N P Singh

But the Nano may not be viable just as it is. The taximen want few changes for it to become their ideal run-about.

“Petrol is not viable for us. We have to be able to convert it to CNG. We’re trying to work it out,” says Quadrose.

Drivers too have their set of demands. Says a taxi driver Rajendra Kumar Tiwari, “We need a carrier and more space. Then it will be great.”

But even with those modifications, there are doubts being raised.

“It (Nano) can only work for very short distances. if I want to go from city to suburbs and back it will not work. They need a sturdy car,” says Chairman, Western India Automobile Association, Nitin Dossa.

The Taximen Union says it’s meeting Tata later this month to figure how the Nano can be a viable alternative for the Premier Padmini.

Is the two wheeler segment dreading the Nano effect?

Tata Motors has challenged global auto firms and kept Chairman Ratan Tata’s pledge to introduce the Nano at the emotional price of Rs 1 lakh.

For the first time in history of automobile, the need for smaller cars would soon overtake the need for horsepower or speed as oil hovers around $100 a barrel. Major auto firms and even bike-maker Bajaj had a small car on display at the Auto Expo that is underway in Delhi. Most of them were concepts to counter Tata’s Nano. But the underlying theme was obvious, ’small’.

The question is will Nano spark a car revolution on the streets that would have an impact on the two-wheeler segment. Nano is far safer than two-wheelers where the fatality rate is double that of cars. Analysts say that even if Nano manages to convert 10% of the two wheeler market of nine million, it will have almost 50% share of the car market.

Nano is expected to be launched around Diwali and may lead to a 20 per cent reduction in prices of two-wheelers and a 35 per cent decline in prices of second-hand cars, according to industry chamber Assocham.

“Nano is expected to change the automobile market in India. It would cater to a typical middle income Indian family of four who wants to avoid rain, wind and dust. Its freedom for four,” says Dilip Chenoy of the Society of India Automobile Manufacturers (SIAM).

The 100-125 cc two-wheeler range, which comprises 90% of the two-wheeler market in terms of sales, could be severely affected with the launch of Nano. Bike makers Hero Honda and Bajaj have realised this and have jumped into the bandwagon of ultra small cars.

Rajesh an IT professional working with an MNC in Gurgaon who, travels every day in a Bajaj Pulsar says, “I would definitely consider buying the Nano as the cost of the car fits my pocket and above all it gives good mileage.”

Industry research organisation CRISIL, in a report, stated that the Nano may bring 65 per cent more families into the range of those who can now afford a car. “The on-road price for a Nano is expected to be in the region of Rs 1.3 lakh. This brings down the cost of ownership of an entry level car in India by 30 per cent, making a new car affordable to families with income level of Rs 2 lakh,” the Crisil research added.

However, Aman Verma a manager working with a Hero Honda showroom in East Delhi had a different opinion, “Nano may give a lot of people a chance to own a car, but more than fixed price, it’s the variable cost of maintenance, fuel and spare parts, where the two wheeler sector has an edge.”

“A car is much more suitable, safer and a comfortable option than a two wheeler, in a cost conscious nation like India, but there will always be a place for a two-wheeler. There will not be a large scale migration to the Nano. Both the bike and the entry level car segment would have its own niche customers in future. In the next five years the two wheeler segment would constitute 25% sales of the auto industry,” adds Chenoy.

Mahesh Kumar working as a Sales Manager for a Tata Motors showroom in Delhi said, “We are getting 50-60 telephone calls daily from people enquiring when exactly the Nano will be available in the market.”

A nation with economic growth touching 9% consecutively for the third year and a population of more than a billion, there is no scepticism that demand will be strong for Tata’s Nano, whose basic model does not include air conditioning and lacks a radio. This is a win-win situation for the company as it would play the volumes game to make profits from its dream project.

The Nano would cost roughly less than half its nearest competitor the Maruti 800 and just about double than that of a 150 cc bike. Two-wheeler manufacturers would now be forced to work on new technologies to make better motorbikes and scooters. This would also in turn influence the price tag of the two-wheelers. It also proves that for frugal engineering, at least Indian manufacturers can outdo anyone else in the world.

“A promise is a promise,” said Ratan Tata after displaying his dream project at the Auto Expo. One American journalist wrote that the Nano is Wal-Mart on wheels. Well, will this prod the two wheeler industry in India to focus on an entry level bike that would cost Rs 10,000?