New Delhi: A historic event: The Tata Nano, clearly emerged as the highlight at the recent Auto Expo in the capital, succeeding in making global history, not just for Tata Motors, but for the Indian industry and the global auto industry in general.
Murad Ali Baig,
No country in the world has so far been able to produce such a complete modern car at such low cost. The Indian automobile industry has been sustained by foreign technologies. It is only now that it can aspire to be a global leader. Earlier, Rs.peoples cars’ like the Volkswagen Beetle, Fiat 500 and the 425 cc Citroen 2CV had been huge global successes, until they became technologically obsolete.
The car: For easy comparison, the Nano is 20 cms shorter than the Maruti 800 but 20 cm taller and six cm wider. It will comfortably seat four large adults and be easier to park. It will also weigh 100 kg less. The 33 bhp engine will generate less gross power than the 39 bhp of the old M-800 but with modern electronic sensors of the multi point fuel injection, instead of the old carburetor, it will be able to deliver enough stable power for an air-conditioner (on the deluxe model) and for driving on mountain roads.
With a rear engine and transmission there will be less weight in front, so power steering will not be necessary. The 623 cc petrol engine will certainly be fuel efficient and the 20 kmpl as claimed, seems realistic. It will meet international crash test safety norms but on the flip side it will have very little boot space. And with a maximum claimed speed of 104 kmph, it will not be very suitable for highway travel. So it will essentially be a cute commuting car for Indian towns and villages.
Achieving low costs: India’s frugal manufacturing costs are already attracting brand names like Hyundai, Suzuki, Ford and Renault to make India a base for part of their global manufacture. The Nano’s frugal costs are the result of innovative product and production technologies as well as astute business management.
About 70% of all cars are made by their component makers so the Nano is the product of huge joint innovations by them all. Bosch, for example, has created a totally new fuel injection system with one injector feeding the two cylinders turn by turn with precise electronic controls. The body is all steel but more plastics will lower weight and costs and many accessories have been minimized. Every supplier has had to shave weight, add value and contain costs.
Costs were also contained by going immediately to a very large scale production of 2,50,000 units a year and requiring that their main component makers set up plants next door to their tax haven site in Bengal. These have shaved pennies through fast and efficient deliveries and pounds by eliminating many taxes and inter state taxes on the car and its many components.
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.
Surprisingly the density of traffic on Indian roads is much less than in most countries and the roughly 200 million people who are carried daily on its 50 million two and three-wheelers, 12 million cars and three million buses are way too important for the Government to ignore. So the priority must be to take urgent steps to improving city roads and parking places and to regulate traffic norms.
Murad Ali Baig is one of India’s foremost auto experts. Feedback to his column can be sent at email@example.com