Impact on the auto market: Priced at nearly half the price of the cheapest Indian car but three times the price of an average motorcycle, the Tata Nano will create a new market niche. It may just end up attracting some 5% of the 7 million annual buyers of two-wheelers and define a new entry level for cars. Indians bought 1.2 million cars last year and the Tata Nano will probably add some 3 - 400, 000 new buyers to this. Bigger cars however are likely to remain unaffected and motorcycles and scooters will continue to sell.
Crowding on the roads: Today there are already about 12 million cars, 50 million two and three- wheelers and six million buses and trucks on Indian roads. 250,000 new Tata Nanos will add about 0.4% to these traffic numbers in the first year. It will certainly add to the existing traffic burden but not as much as many people fear, even after it achieves its peak capacity of 1,000,000 units.
Issue of atmospheric pollution: Every automobile causes pollution but vehicular pollution is estimated to contribute to less than 30% of CO2 build up. Ratan Tata has claimed that the Tata Nano will meet Euro IV standards and emit fewer pollutants than a modern motorcycle. All new vehicles are however 74 to 82% less polluting than vehicles made six years ago. What is the need of the hour is for the Government to remove the polluting older vehicles.
Effect on employment: The Tata plant will directly employ about 2,000 people. Its vendors in Bengal may employ even more. There will also be many more employees with their other vendors and suppliers of steel, glass, rubber and other raw materials as well as thousands in their dealer network.
In the rural area of Singur in West Bengal some 5,000 salaried jobs for engineers and workers will have a big effect on tertiary local employment for at least another 50,000 people who will provide them and their families with housing, education, health services, food, stores, clothing and entertainment, as has already been seen in other auto driven towns that have mushroomed around auto plants, be it in Haryana, UP, Punjab, Maharashtra, Tamil Nadu or elsewhere.
There will be fewer farm workers available as many will move to better paid urban jobs but this will also increase local farm wages and farming will have to get modernized and mechanized as it seeks higher value crops as is becoming necessary everywhere in India.
Global impact: Many countries want a low cost modern commuting car and we can be certain that we will soon see the Nano as India’s flag bearer in many foreign markets. But it will have to first prove itself in its home country where some inevitable initial problems will be easier to correct. With large volume demand, we can expect local manufacture in several countries as well as sale through the huge network of Fiat with whom Tata Motors already have an alliance.
India for most months of the year has a horrid, hot, dusty or wet climate. With growing affluence, people are upgrading their vehicle ownership and moving beyond bicycles and bad buses. Even with better public transport, they want personal transport which is where the Tata Nano makes a very comfortable place for itself.