Submitted by: Cece Reyes

Ratan Tata of the Tata Group envisioned building an eco-friendly People’s Car. For the Tata Group, the Tata Nano, a mass consumption blockbuster, has been developed to deliver a one lakh rupees or $2500 people’s car and is catering to newly developing economies, and India in particular. After a long road since the original launch in January 2008, the Nano is due to enter the Indian marketplace later this month.

The Tata Group, since 1868: Click here
Tata Motors: Click here
Tata Nano: Click here

With 10 years of experience in the auto industry beginning with the Tata Indica, the Tata Group began development of a new super low cost car. Tata’s inspiration for the Nano was the common sight of entire families driving around on a single scooter, and the early concepts were merely more than a next generation scooter or rickshaw. However, the Tata Group determined that “the market does not want a half car. The market wants a car.”

“And if we want to build a peoples’ car, it should be a car and not something that people would say, Ah! That’s just a scooter with four wheels or an auto rickshaw with four wheels or not really a car and I was reminded of a very interesting concept that Chrysler did many years ago when they developed an Asian car. It was a plastic car and for those who may not know or remember, it was one piece, the whole car from front bumper to back bumper, moulded in one piece of plastic, half of it and the other half. And it was welded together to make the whole car. “ - Ratan Tata

Because the Nano has been designed with this concept of a plastic car, the company is able to save huge manufacturing costs by adding pigments to the plastic and avoiding the painting process altogether.

Interview with Ratan Tata before the launch in 2008: Click here

Much of the recent talk of the new super low cost cars has been spurred by the announcement of the Nano Tata in 2008. After many delays including protests from displaced farmers and a later relocation of the factory, the Nano Tata is scheduled to enter the Indian market later this month. The fact is that the low cost of the vehicle will likely enable millions of early adopters, to join the shopping spree, which will ultimately soar the car ownership numbers not only in India but around the world. Today, India imports 70% of its crude oil, so increased oil consumption will inevitably lock India into greater dependence on oil.

The current market for the Nano’s competition of inexpensive vehicles consists of the Chinese-manufactured Jinagling Alto, the Chery QQ and the Geely MR, in addition to the Japanese-made Suzuki Maruti 800, the car used as a benchmark for designing the Nano. All of these vehicles have a price ranging between $3,800 and $5,000. And Renault-Nissan announced last year that it will be launching a super low cost vehicle that will be marketed mainly to the Indian marketplace in the year 2010. The price is said to be around the $2,500-3,000, in direct competition with the Tata Nano.

The competition in the super low cost car market: Click here

Renault-Nissan-Bajaj: Click here

So we are starting to see that Tata’s new car is already forcing other manufacturers to consider lower prices and to introduce their own super low cost vehicles, thus creating a growing demand fr cars and increasing their accessibility. If we look at the big picture of the Nano effect and its copycats, there will inevitably be downward pressure on used-car prices. Imagine a Nano with an employee discount and 0% APR. Will the face of India and that of the emerging economies be inundated with super low cost vehicles? Referring to Tata’s Nano, Indian climate change expert R K Pachauri, chairman of the Intergovernmental Panel on Climate Change, says the One Lakh Car is giving him “nightmares”.

We can hope that Tata has achieved his goals regarding the “eco-friendly” element. “The Nano is about 10 feet long and 5 feet wide, has four doors and can accommodate four adults. Its two-cylinder engine is expected to get around 47 miles to the U.S. gallon — a crucial statistic in this age of sky-high oil prices. And Tata Motors claims that it will produce lower emissions than two-wheelers.” The number of Indians who own passenger cars is low right now, about 8 in 1000, but the number is growing rapidly – and with 250,000 Nano’s about to hit the streets, it will be increasing soon. It is estimated that 1,500 cars a day are hitting the road in India.

And, so much for the People’s Car, last year farmers and activists staged violent protests at Tata Motor’s Singur plant saying local people were forced off prime farmland to make room for the plant. The government said that the affected farmers were ‘compensated’. The protests continued and in October 2008 the Tata group decided to move their factory to Sanand, India (that’s near Ahmedabad, in the state of Gujarat). The plant covers1,100 acres (445 ha), and can produce 250,000 units annually, which could be expanded to up to 500,000.

Protests in August 2008: Click here

Factory move in October 2008: Click here

New location October 2008: Click here

In addition to the Tata plant, there are many other manufacturers that are setting up shop in India. Mercedes-Benz has a new manufacturing plant in Chakan in Pune

Ford has a plant in India as do Hyundai and Maruti Suzuki, and GM has recently announced that they have plans for a facility in India as well. A significant portion of their plans, in light of the dismal economy, revolve around a series of mini cars similar to the Chevrolet Spark. Take a look at the Spark India website, they call it a “music” car and are marketing them with a chance to win iPods.

What a coincidence, the iPod Nano and the Tata Nano share a name. Click here

Other manufacturers in India:

Click here

Click here