Based on advance buzz, car dealers see potential in the Tata Nano even as the industry has cooled in recent months amid the recession. Parth Sanyal / Reuters
Tiny and sporting a stubby nose, teardrop headlights and a high stance, the Nano looks like little else on the road and houses a 34-horsepower, 600cc rear-mounted engine which can, it is claimed, deliver excellent fuel economy of close to 80km per gallon.
Hailed as the new people’s car, it is India’s equivalent to the Volkswagen Beetle and the original Mini. It was dreamt up by Ratan Tata, chairman of Ratan Motors, a 71-year-old business titan from Mumbai who set out to create “a safe, affordable, all-weather form of transport” for the hundreds of thousands of Indian families who travel around on motorcycles – father at the helm, young child standing in front of him, wife and baby seated behind, her sari blowing in the wind.
Tata had expected to make 250,000 cars a year, but delays in opening a Nano plant mean the company will, according to reports, probably sell only between 30,000 and 60,000 in this year.
Already, the Nano has captured the imagination of enthusiasts worldwide who have joined online fan clubs, coined terms like Nanolution and urged its creator to take the car to Europe and the United States soon.
However, in the current economic climate there will inevitably be a few bumps in the road. And critics are already warning that there will be consequences in offering such a cheap car to a booming country of more than one billion people.Our concern is increasing the total car stock in our cities,” says Anumita Roychowdhury, associate director of the New Delhi-based Centre for Science and Environment.
“If you begin to make ultracheap cars, then it means it is likely to expand car ownership in our cities.”
This must be music to the ears of a stalling global car industry. India is a largely untapped car market full of consumers with growing, but still limited, purchasing power. Currently, there are about seven cars for every 1,000 people in India, compared to 600 to 800 cars per 1,000 in developed countries. Tata is banking on the logic that if it offers a car that is marginally more expensive than a scooter, Indians will buy it.
Dilip Chenoy, director general of the Society of Indian Automobile Manufacturers, says the Nano can help create a new car consumer market segment that can meet the aspirations of a lot of people who want their own form of mobility but are unable to access it.
“The demand is only going to grow,” says Pankaj Chandra, director of the Indian Institute of Management in Bangalore. He believes the Nano’s example will spur other companies to increase efficiency and become more creative.
“From a purely engineering and manufacturing point of view, this is a very innovative car.”
At 1.5 metres wide and 3.1 metres long, the Nano is the same width as the Smart Car, and about 60cm longer. It has four doors and, Tata Motors says, comfortably seats four. The Indian model has basic safety features including a crumple zone, intrusion-resistant doors and seat belts, but there are no airbags. Designers did away with other common car features to achieve the low price: the standard version does not have a radio, power brakes or air conditioning. It is also made with single sheet metal, and maximises interior space by, for example, putting wheels on the edge of the car.
The company touts it as environmentally friendly since its exhaust emissions meet Indian regulatory requirements and the car produces less pollution than motorcycles manufactured in India today. The European model, scheduled to be ready in 2011, will satisfy that continent’s more stringent emissions standards.
The next cheapest car in India is the Maruti 800, which revolutionised the car industry in the 1980s as the country’s first affordable car, and now costs about $5,000. Currently, Maruti Suzuki dominates the passenger vehicle market in India, but the vast majority of people still drive on two wheels, not four.
Mr Chenoy sees the Nano as a catalyst that will spur other manufacturers to develop cars at a similar low cost. “The space is there for someone to do it,” he says.
The Nano also changes the depth of India’s car-making capacity, he argues, as it proves the country can design, engineer and deliver an affordable and efficient car. “I would not like to equate it to the Smart Car or the hybrid car, but the Nano is a green car. It has a very high fuel efficiency.”
Still, critics are alarmed by the potential for a rapid rise in car numbers.
“If you’re just giving a vehicle-to-vehicle comparison, then a small car that Indians drive today is definitely more fuel efficient than the big cars you drive in the US,” says Ms Roychowdhury, who is also the spokeswoman for the Right To Clean Air campaign. But what environmentalists do not want to see in Indian cities are more cars clogging already congested roads and polluting the air.
Residents say the air is much fresher since the ubiquitous auto-rickshaws, taxis and other forms of public transport switched from diesel to compressed natural gas. Some now fear the Nano will replace some three-wheelers.
With five million cars on the road, no one in Delhi would deny the chaotic mess that plagues its streets from sunrise to sundown. The government is trying to address the congestion with a new road policy, and Mr Tata says that if in five years time his company were to produce 500,000 small cars a year, that would only amount to 2.5 per cent of all passenger vehicles in the country.
“This could hardly be considered the nightmare of congestion that is being raised today about our new small car,” he has said.
The Centre for Science and Environment has lobbied the Indian government to invest more in public transport, which, despite its inadequacies, is popular in the country.
“In India because we are still in that take-off stage we have the opportunity to grow differently,” says Ms Roychowdhury.
“Nano or no Nano, still the traffic is very bad,” says Sanjay Thukral, chief of operations at Sanya Motors, a Tata dealership in south Delhi.
But, he adds, “just because the infrastructure is not very good doesn’t mean that the car companies shouldn’t be developing more cars.”
Prospective buyers have already been calling in to his showroom in the upmarket Defence Colony neighbourhood. And it hasn’t only been people who are eager to buy their first car.
“There are people who have one or two cars and still they want a Nano,” says Mr Thukral. He is worried that supply will not be able to meet demand, and points out that the margins on such an affordable car will be very thin. India is not immune to the global recession and Mr Thukral has seen business slow down. He hopes the Nano will turn that around.
In south Delhi’s chic Hauz Kauz market, the narrow streets may already be clogged but the Nano’s imminent arrival is causing a stir.
“I know many people who would want one,” says Poonam Dubey, a 24-year-old business analyst. “It’s not good for Delhi, but if you talk about smaller cities and the middle class, whose per capita income is less, for them it’s good. Cars are a show of some sort of luxury. It’s a dream for them.”
Nineteen-year-old Uday Bhatnagar, leaning up against his Suzuki motorbike, is more dismissive. “I don’t want to drive a bite-size car,” he said.
“My view is that it’s still too early to tell. Let the product actually come into the market and see if it delivers.”
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