Mumbai: Shweta Kumari is waiting impatiently for Tata Motors Ltd’s new Nano to hit Mumbai’s car showrooms later this year.
With an ex-showroom price tag of Rs1 lakh, the Nano will cost about half the price of the cheapest car currently on the market, easily affordable for Kumari, who works as a software developer. “I can drop my kid at school, go to work and go shopping more comfortably,” said Kumari, who now shares a car with her husband.
But some environmentalists are dreading the prospect of hundreds of thousands of low-cost cars hitting polluted and overcrowded roads around the world in the next few years.
No small worry: Customers look at a Swift at a Maruti showroom in New Delhi. Environmentalists dread the impact of hundreds of thousands of smaller and cheaper cars hitting the?roads soon. (Photo: Bloomberg)
“In the current policy and regulatory framework, the low-cost cars will be disastrous,” said Anumita Roychowdhury, associate director of the Centre for Science and Environment in New Delhi.
Car makers, warily eyeing sliding sales in developed markets such as the US and Europe, disagree.
They argue the small, fuel-efficient vehicles are a greener option than gas-guzzling SUVs and larger cars as oil soars above $130 (Rs5,577) a barrel and as consumers in emerging economies such as China, India and Russia get behind the wheel in ever increasing numbers.
Tata Motors, which unveiled the snub-nosed Nano to a rousing reception in January, says the world’s cheapest car meets the strictest environmental criteria, and its lean design delivers high fuel-efficiency of about 20km per litre (kmpl) of petrol.
The car will have tailpipe emissions well within Indian requirements. It is less polluting than motorcycles and scooters, Tata Motors says on the Nano’s website, http://tatanano.inservices.tatamotors.com/tatamotors/
“The concern is really about the sheer numbers,” said Mohit Arora, managing director for India at JD Power Asia Pacific Inc.
“They may be more fuel-efficient than bigger cars, but they will still emit carbon and nitrogen oxide...and that’s a valid concern.”
The numbers are staggering. Still, only eight in 1,000 people in India own a passenger car. In China, it’s about 20 but in Japan and the US, it’s at least 450 cars per 1,000 people.
Every day, about 17,000 private vehicles are being added to China’s already congested roads, while Indian passenger vehicle sales are expected to rise by almost 50% over the next three years.
Such explosive growth will demand a rethink from auto makers.
“Over the next 5-10 years, technology, moral pressure, regulatory pressure and high oil prices will push even premium car makers into making changes to their engines,” said Steve Howard, chief executive of The Climate Group in Britain.
India is at the forefront of the move to low-cost cars, and is doing its best to promote their green credentials.
Two- and three-wheeler maker Bajaj Auto Ltd says its $2,500 car, which it is building with Renault SA and Nissan Motor Co., will aim at a fuel-efficiency of 30kmpl, or twice that of an average small car, and carbon dioxide emissions of 100g/km.
“That would make it far superior to cars even in the European Union, which wants to bring down carbon emissions to 120g/km (from 2012), and the 180g/km that India is fighting to defend,” said the company’s managing director Rajiv Bajaj.
The Bajaj venture will have an initial capacity of 400,000 units, while Tata expects eventual demand of one million Nanos.
Rival car makers including Fiat Automobiles SpA, General Motors Ltd, Ford Motor Co., Hyundai Motor Co.and Toyota Motor Corp. have all expressed interest in building a small car that is affordable to more middle-class consumers in emerging markets.
“Growth is in the emerging markets, and the bulk of demand there is for small cars because people are much more sensitive to fuel prices,” said JD Power’s Arora.
But not everyone is sold on the small and super-cheap car. Honda Motor Co., the world’s biggest motorcycle maker, is notably cool on the likes of the Nano. “I don’t see the draw of that kind of car,” Honda chief executive officer Takeo Fukui told reporters recently in Tokyo. “In India, the roads are so congested that it’s easier and quicker to navigate the traffic on a two-wheeler.”
Honda and Toyota are leading the way on cleaner petrol-electric hybrids, and some environmentalists argue that getting prices down on these green technologies is where efforts should be concentrated.
GM expects to launch its plug-in hybrid Chevrolet Volt in 2010. Renault/Nissan are building an electric car for Israel that will be subsidized by the government and which chief executive Carlos Ghosn has said will be the most environment-friendly mass-produced car.
Tata Motors, which is working with a French firm on using compressed air as fuel, has signed up for the Progressive Automotive X Prize, a $10 million competition to build the first mass-produceable 100 miles per gallon (42kmpl) energy-equivalent vehicle.
“India has a fantastic reputation for producing clever solutions at a very low cost,” said Nicholas Stern, author of a landmark 2006 report on the economic costs of global warming.
“In the West, we don’t have a similar drive to find low-cost solutions,” he had said on a visit to Mumbai earlier this year. “A lot of technologies are already sitting on the shelves of manufacturers, but it’s been easier to persuade consumers to buy bigger cars rather than greener cars that are more expensive.”
Governments must now use a carrot-and-stick approach to push for cleaner emissions and better fuel efficiency, JD Power’s Arora said, such as tax incentives and stricter regulations.
India’s recent cut in excise tax on small cars has encouraged several manufacturers to draw up plans for small cars, he said.
And The Climate Group’s Howard cautions against demonizing low-cost cars or belittling their importance in emerging economies such as India, despite concerns about their impact.
“It’s easy to look at cheap, mass-produced cars and say, ‘Oh, they’re going to cause more pollution.’ But it’s an elitist view that only a small percentage of the population should own cars.”
Chang-Ran Kim in Tokyo contributed to this story.