The Tata Nano: Small Car, Big Topic
March 10th, 2009
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:
Entry Filed under: India, Pre-Departure
10 Comments Add your own
1. Logan J Travis | March 14th, 2009 at 10:54 am
I found your comment on India’s dependency on oil imports rather provocative. The possibility of another country - especially one with a population so rapidly outpacing its infrastructure - developing a “car culture” raises concerns about safety, social and environmental impact, etc. So, I did a little research and want to share the numbers I collected:
Using your statistic of 8 in 1,000 Indians owning cars along with an estimated total population from Wikipedia (not exactly academic, I know) of 1.15 billion, there should be approximately 12 million passenger vehicles on Indian roads currently. In the U.S. we drive a whopping 250 million as of 2006 (approximately the same for the European continent). That is nearly 21 times as many vehicles all with notably worse gas mileage than the Tata Nano. With the estimated 1,500 new cars hitting Indian roads per day it would take approximately 435 years for India to reach the same total passenger vehicles as the U.S. today.
I guess my concerns about an Indian “car culture” have a way to go before reaching catastrophic levels. Still, it would be a rather interesting (by which I mean desperately toxic) world if India had the same vehicle ownership rates as the U.S. Approximately 90% of Americans drive a car to work with personal ownership ranging from 75-85% (the statistics I found pulled from several years). If India follows our example they’ll have rush hour traffic totaling over 1 billion cars. Let’s hope the same innovation that conceived the Tata Nano will imagine a better world without it.
2. Emily Schaapveld | December 29th, 2009 at 3:40 pm
It is surprising to me that this day in age, the world has not yet learned that a “car culture” is not going to be sustainable. Yeah, that’s great that Tata has developed a car that is small, fuel efficient, and can be bought for a whopping $2500, but seriously, the world’s cities cannot accommodate billions of cars. I agree with Logan, hopefully we can start thinking and living outside of the box by using the same innovation that conceived the Tata Nano to change the world to not depend on cars.
3. Matthew Perez | January 3rd, 2010 at 11:20 am
Although I understand the concerns associated with India developing a “car culture,” India and the automotive industry have taken steps to address these issues. Most Indian buses, taxis, and other forms of transportation are compressed natural gas (CNG) powered to reduce emission. One company in particular, The Karnataka State Road Transport Corporation, has made efforts to use an even cleaner fuel, biodiesel. Even Tata is working on an electric version of their Nano.
It is easy to bash on the car for its many faults; polution, traffic, accidents, etc. Yet, despite this, it is the preferred form of transportation of those wealthy enough to afford it. This is due to the fact that the car is still the fastest and most conveinent form of transportation. Since this unlikely to change in the near future, reducing the problems associated with the automobile is the next best option.
4. John Barry | February 21st, 2010 at 10:38 pm
While I am all for a green world where our children will be able to enjoy the same natural resources that we were fortunate enough to enjoy, I don’t find the creation of the Tata Nano to be problematic to this goal simply because it is cheap enough so that it allows people who might otherwise not have the opportunity of owning their own vehicle to now have that option.
I like the Nano because it is small and therefore uses less natural resources to manufacture. Because of its size it is also less taxing on the environment as it is more fuel efficient than its larger counterparts. Furthermore, cars themselves allow nations to be more productive and this heightened possible level of productivity might in fact be what it takes for us to collectively create a better alternative to gas guzzling automobiles for our transportation needs. For the time being, however, I feel that the mere existance of the Tata Nano is great in allowing consumers to have a less taxing way to get around.
5. Jordan Wente | March 7th, 2010 at 7:20 pm
I think it is not necessarily our place to disagree with India evolving into a car culture. We in the US should not be able to judge India on this matter. At least India is developing a car culture with environmental issues in mind and taking measures to produce eco-friendly cars. I agree with John, I do not find the Tata Nano that much of a threat. What I would be concerned about is if India started adopting gas guzzling SUV’s. The development of a car culture in India will hopefully be complimented with efforts to develop alternate fuel sources and even more environmentally friendly cars. The Indian economy will likely reap a great deal of benefits of the increased productivity the car is likely to bring. The Tata Nano seems like an extremely practical solution to growing demand for low cost cars in India. However, I do have to question whether or not the infrastructure in India will be able to accommodate the growing demand for cars. The introduction of more cars onto the roads suggests to me that traffic congestion will become increasingly problematic.
6. Catherine Kristensen | March 8th, 2010 at 5:38 pm
I went to Wikipedia to check out the Tata Nano’s stats and one figure in particular struck me - the car’s weight. Weighing in at 1400 pounds, the Nano is set to admit defeat to any of the much heftier “holy cows” it encounters on the streets of Delhi.
Logan’s math is amazing - I don’t think we can imagine a world 435 years away in which India’s car consumption reaches American levels. I hope for the ozone’s sake that day that is never reached.
Does anyone else see a budding opportunity to develop a car insurance company in India? My first thought is yes, this is a sector poised for growth! If you could get the government to mandate car insurance (as we do here), you’d be raking in the premiums! Unfortunately, after reading that the manufacturer admits to the use of plastic and glue in place of welded steel, I worry about resulting medical bills from accident-related injuries and have to pass on that business venture idea…
7. Michael Minasian | March 10th, 2010 at 11:14 am
I think the Tata Nano will make a lot money. I do not think that this is a bad thing. It is comparitvely fuel efficient when comparing it to many cars driven by Americans. Let’s look at this issue honestly. The Indian who is finally able to afford a Nano, will not be purchasing a Mercedes next week. There is money in India, but those people already have cars or simply don’t want them. This is meant to appeal to a much larger market.
The only issue I see is that quality and safety are reported to be sacrificed when compared to many other cars in order to cut costs. The Indian people tend to be very frugal. They often save up for a long time before making a purchase. It might be hard to sell them on a 2-3 thousand dollar purchase which will only last them for a couple of years.
8. Leslie Mann | March 18th, 2010 at 6:04 pm
I agree with Jordan and Michael that the car should not be seen as a threat but rather an opportunity for India’s transportation system, or lack thereof. India must be concerned with its infrastructure; with over a thousand new Nanos on the road each day, India will be forced to make permanent changes to its infrastructure out of pure necessity. Matthew made a good point as well that India’s “car culture” whether you agree or disagree that it is good for the county, is here to stay. With more cars on the road, I do think there will be greater risk for accidents, but if two-wheelers are the only method available for most people, won’t the car at least be a safer alternative? The car does not look like much, but I think it is a much safer alternative for families in India, who pack 3 or 4 people, children included, onto their two-wheeler because they have no other option for transportation. Not only is it a safer alternative but for many, it is being able to realize a dream of owning your own vehicle. When I think of the sense of accomplishment and pride that comes with this type of ownership, it is well worth the price in my opinion.
9. Jeff | March 19th, 2010 at 9:10 am
I’m glad to see another reason for India to work on it’s infra-structure. The dilapidated infra-structure that currently exists in India is one of the reasons there can’t be a higher growth rate. If roads and airports were improved allowing businesses to get their products to market, there could be more jobs and the entire country could benefit. More foreign investment would flow in because higher confidence from abroad.
I also think this could be a boon for the insurance companies, domestic and foreign. Currently the maximum ownership of a foreign insurance company is 29%. A bill in parliament to increase to 49% has been on the back-burner for years. Maybe a successful mass produced car will help the insurance industry (although I generally despise them).
I agree with Emily, that now is not the time to form a “car-culture” and I have real doubts that it will happen with gas prices in India 10 times that of the US in the 50’s when it formed in the US.
10. Vitus Holzner | March 19th, 2010 at 11:07 am
I am not one of the people who are screaming bloody murder, suggesting that the Nano will be the final blow to our earth’s climate but I do think that India transition to a car culture will bring huge environmental problems. Sure the Nanos tiny 624cc gasoline engine capable of about 50mpg is less of a threat than 2MPG SUVs but the sheer numbers of Nanos expected to be on India’s roads soon will send India’s already-bad pollution record soaring. So the Nano will mean more pollution and congestion in a nation that is already suffering severely from both.
Resources:
New Scientist Environmental Blog
The Independent
Green Questions and Answers
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