I know this has very little to do with what i generally tend to write about, but considering the hype which has been generated in the market over the last few months on the “peoples car” project by the Tata’s …
The NANO was officially launched today at the auto expo in New Delhi with a starting price tag of 100,000 INR not including VAT. Tata’s plans of offering various up-market options as well. Its a 640 CC , 4 speed manual with an AC. Basic suspension and the dash only has a speedometer, a fuel indicator and an oil light. Brakes are drum based and the mileage is projected at 20-25 or so. Saftey features was an apprehension in the market but the car has passed frontal and side crash exercises. The vehicle also meets all environmental norms of the country as of this date.
Its about8% smaller than the Maruti 800, bumper to bumper, but has 20% more internal volume. The roll out of the car is definitely going to be a buzz in the market for a long long time. Maruti and Hyundai have clearly stated that they cannot match this price given their policies on safety etc and have publicly acknowledged that market share and leadership (for Maruti) is under threat and in all probability will come down.
But are all things gold? Maybe not. While all kudos to the company for this industry breaking project, there are interesting and some mixed reactions in the market.
The recent issue of Autocar carried a few interviews with the TG which Tata is going after and many people said that they might not buy it. Primary reasons quoted were
1. “Dont want to have the cheapest car in the world”
2. Mileage needs to be comparable to that of a motorcycle.
3. Maintainance cost… will it be as cheap as that of a 2 wheeler?
I would also keep in mind the added cost of a higher insurance level and other taxes as well.
One of the interesting articles i read in response to this car is here. Its an insight into how the launch of this car will affect the petroleum industry in India. Truly insightful and a must read , it states that if Tata meets its goal of 2.5 lac cars a year, then in 2 years there will be 500,000 new cars on the roads. Assuming that the car uses 1 Liter of petrol a day then the additional burden would be 18.20 crore liters a year, and almost 40 crores if they touch the 1 million mark.
Given the fact that Indian imports 70% of its crude oil and petroleum marketing companies losing about9 INR (o.22 USD) per liter , the losses will be huge.
The final question is of profitability. Ravi Bajaj is skeptic of the profitability of the car and while he does not doubt that making small cars is easy enough, but profitability is not. In my opinion i dont see the basic variants being profitable, and believe that Tata will look at the up market variants for the margins.
The base market for the car is clearly the 2 wheeler sector, which logically then would face the maximum impact. While Maruti etc might now have a battle on their hands with respect to the 800, i dont think it poses a threat to the 2.5 Lac plus cars given the additional quality, brand, and features they provide.
I also believe that the entire 2 wheeler segment is not going to respond equally to this. For a guy looking at buying a Bajaj at 30,000 ex, this is still a very high proposition. The closes is the cruiser and the power segment which fall between the 70-80k range, but this group is small and a percentage of them would own bike not for economical or day to day purposes but more as a lifestyle choice.
Would i buy it….no..but then i already have a car!