A car for a lakh?!

Well, Ratan Tata did deliver on his promise. Whether the car’s a success or not will yet be seen…but one thing is that he has proved that it can be built. Most news sites are going ballistic about it and how it will ring the death-knell to the 800. The 800 however, already seemed to be dying with better looking and sportier versions like the Alto being available from the same manufacturer at a slightly higher price.

I would be more interested in the comparison of the Nano with an auto-rickshaw. Currently it costs like 1.2L for a good auto rickshaw. The Nano might cost something like 1.25L to 1.3L after taxes and everything. The plus is a much higher luggage space(nowhere have I seen any mention of the luggage space the nano offers, but am assuming it would be larger), a much more comfortable journey, and of course its a better option when it rains.

Being a 1L car, I think the first impression the car will make will be in the public transportation domain. I can foresee auto-rickshaw drivers switching to taxis which would be nanos. The cost will be higher than that of an auto per km. And well, that’s understandable. A rickshaw runs on LPG and the cost per km is something like 2 Rs. With a car it will be higher and close to Rs. 3. Adding investment cost and maintenance, am guessing it might be close to Rs.7 to Rs. 9 per km, or in short, between an auto and a taxi.

As for an average common man buying this, it would generally be those who can’t afford a good car and are in the < 10k per month income range, those who typically go for a used car. Those who earn more and can afford a new car will definitely go for an 800 or an alto at the basic, simply because a car is not just a vehicle for transport, but also a status symbol, not just in India, but everywhere. Someone parking a Nano will be smirked at by someone with an 800 or an Alto, who get the smirks from the Santros and WagonRs and so on, and I guess it might bode well for an 800 that there's a car now below it in the pecking order.

As for the market, it will at least prevent small car manufacturers from hiking the prices of their base models, at least in the near future. Eventually cars like the 800 will have to decide where they stand and whom they target. Those like the Santro, the Swift, the Getz etc have their own market and it is well over the 800 and the Alto. Those are not going to be much perturbed by the Nano.

The size of the car is pretty impressive, and is actually well suited for Indian roads and parking, almopst like the Smart. Looks, well, not exactly great. Its kinda similar to a Matiz (or the Spark, as it is known now). But its not bad either. But well, when a WagonR or a Santro can survive and flourish and when Suzuki was forced to launch an ugly version of their Zen, I guess in India ugly is in!

More pics of the car here.

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9 thoughts on “A car for a lakh?!

  1. Great analysis dude!
    I’ve been following the news since morning and was planning to make a post, but you’ve done better. This is really exciting! It’ll be great if this replaces the 2-wheeler for the small families who want to commute and replaces the autos.
    I think you went a little overboard with your status symbol idea. Yes, everyone does that, but for middle aged and older people, they don’t give a damn how a car looks or what segment it fits in, they just want something that is on 4 wheels (so that there is no need of balancing), is covered from Sun/rain, easy to drive (auto-gear would be good), affordable and not be at the mercy of auto/taxi drivers.
    You’re totally ignoring the semi-urban and rural consumers. IMO this will be the Nano’s biggest market. Anyone who has a family in those areas has been crying out for a more affordable vehicle in which a dad, mom and children can travel together without being hit by the Sun or rain.
    Also, did you read the comments of Pachauri and Co. about having nightmares thinking about the environmental cost of this car. This is what I say to him: “Have you ever been in a situation where you couldn’t afford a car and was forced to fit your entire family on a 2-wheeler, negotiate Indian city traffic, escape potholes, be at the mercy of Sun/rain and get to your destination without getting killed? Pachauri, please get some perspective!!!”

    1. Re: Great analysis dude!
      You’re totally ignoring the semi-urban and rural consumers. IMO this will be the Nano’s biggest market. Anyone who has a family in those areas has been crying out for a more affordable vehicle in which a dad, mom and children can travel together without being hit by the Sun or rain.
      Hmm well…was looking at it from the Bangalore perspective..
      hence also the auto rickshaw idea… 🙂
      Thinking of semi-urban and rural areas…I wonder if there is infrastructure there to support a small car?? But yes, it will definitely be a big market for them and a consumer base that hasn’t been tapped by other manufacturers.
      I think you went a little overboard with your status symbol idea. Yes, everyone does that, but for middle aged and older people, they don’t give a damn how a car looks or what segment it fits in, they just want something that is on 4 wheels (so that there is no need of balancing), is covered from Sun/rain, easy to drive (auto-gear would be good), affordable and not be at the mercy of auto/taxi drivers.
      The status symbol was for those who can afford a bigger car, not for those who can’t. Its definitely a boon for those in the <10-15K per month income level.
      As for environmental concerns, yes more cars would definitely mean bad for the environment, but pointing fingers at the 1L car is the wrong solution. What we need is a good public transport system. Preventing people from owning cars is not the solution. In cities like Melbourne, Beijing etc what I’ve observed is that people have cars but they use public transport for work, preferring to use cars for shopping and weekend activities or even to drive to the closest train station every day.

      1. Re: Great analysis dude!
        what I’ve observed is that people have cars but they use public transport for work
        Same here. Even though the cars are heavily taxed (highest taxes in the world), people still buy them. For any family, having a home and an independent means of transport is an emotional issue that no government can force them to overcome. There’s always public transport for daily commuting needs.

    1. That may be another reason why Bajaj is scared of this car and they’re planning to launch their own cheap car. At first I thought that’s because they make bikes. After ‘s post, I remembered they make autorickshaws too!
      The price of the Nano is just sweet for the autos. It would be a relief to see some of them being replaced with Nanos. Auto-drivers are going to find ways to adulterate fuels for Nano too, but atleast the vehicle is more balanced and less agile than an auto, that should increase safety on the roads.

      1. Adulteration, I guess, is something the law enforcers need to take care of…
        And one thing I like is that it won’t be that easy to maneuver a car into gaps like they do with autos…
        even otherwise, Indica became a hit with the taxi owners…simply cos of the diesel option…Nano’s first mark will also be with Taxis…
        might not revolutionize cos of the luggage space issues, but will at least be used for people getting to places…

  2. Sakkath analysis maga…its not just reporting like other blogs…
    I heard even 800 is switching to its older price of 1.4L. Bajaj is also coming up with a 2L car, even they might reduce the prices.
    This car is good for middle class Indian families.

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