Friday, February 01, 2008

Tata's Nano: For who?

Wiki says

"The automobile industry in India is the eleventh largest in the world with an annual production of approximately 2 million units. India is expected to overtake China as the world's fastest growing car market in terms of the number of units sold and the automotive industry is one of the fastest growing manufacturing sectors in India. Because of its large market (India has a population of 1.1 billion; the second largest in the world), a low base of car ownership (7 per 1,000 people)..."

For many Indians owning a car is dream.

Mr. Ratan Tata through his Rs. 1 lac car – Nano – has made the populace's dream more achievable true.

Considering many bikes are selling are selling at upwards of 70 k, doesn’t Nano look like a sure success? Who will buy the Nano? How is the market dynamics going to change?

I am not sure if Nano is going to be a success; I do expect it to be.

Will I buy a Nano? No. Atleast, not now. My wife and I are yuppies and a DINK couple. I work as Manager in a software firm while wife is employed at an MNC publishing house. By SEC segregation, I should surely be in SEC-A. I own Maruti Swift (my first car was Alto). I have a Scooty and a cycle. Yes, bi-cycle. I took to cycling about two years back and use to get to station and to the club.

Nano can/will either be a first car for the bourgeois or a second car to the elite. As first car idea, I think it will be a great success. It might even hurt sales of motor bikes at least the low-end models. Low-end models, did I say? At its price it should only hurt high-end models and not low-end model, isn't it? On the contrary, I feel that those who buy high-end bikes do not buy for functionality. Their purchase decision is more on aspirational. Bikes, today, look handsome and are very powerful. They make a statement! Long time back, Bajaj introduced Eliminator. And, in those days, it was priced at 80k. My friend told me that he would rather buy a second hand Padmini or 800. I told him that if he drove one of those cars, nobody will give you a look but Eliminator was sure to attract eyeballs. Story of Nano vis-à-vis higher-end mobikes is pretty much the same. Personally, I would not like to drive around in a Nano. At least, not after Swift. Even if I buy another car, it won't be Nano.

The other day a young friend of mine said that Nano will be great vehicle of college students. Point to ponder about. For the ultra rich, Nano can become the birthday gift for their kids. But even if that is true, I think that Nano will become a ‘girly’ car. Like the Scooty and others of its kind. Slow speed and positioning is likely to put off guys.

Do you remember this oft repeated statement by ‘advisors’ when you have just learnt driving and plan to buy a new one? They would say “buy a second hand Maruti (read 800), learn well and then go for a better car”. Valid point, isn’t it? I think Nano has a great potential to become the nascent-drivers preferred choice. Watch out, Maruti and second hand car dealers!

Is it likely to sell in rural area than in cities? I think not. Driving conditions is not so conducive in rural area and I am sure that Nano will not be as strong a car as Amby. Of course, mileage and price point is definitely attractive. The next 32-cities in India are the potentially are bigger markets for Nano than any other market. That is one market which is value-for-money conscious.

I am just thinking, what will be the re-sale value of a Nano? How is that likely to affect the car market? Oh god, what will happen to the mobikes market? Interesting times ahead in the automobile industry.

So, is it good for India? Where are the roads to accommodate the influx of Nanos? Worse, the oil prices don't seem to know where south lies. But on the positive side, Nano is also likely to provide indirect employment opportunity to many.

Mr. Tata, as a visionary, couldn't you have planned the car to run on alternate fuel. Solar/Water/Hydrogen/Electricity?

Pic source:


B Jo said...

Very Good thoughts, mate. I align myself with Sunita Narain who was interviewed by Karan Thapar which I have qouted in (its in French)
Otherwise Tata is working with ISRO (in french)to produce a car which emits only Water.
So I think, Tata has brought out Nano just to prove a point to the world that Indians can "also" construct futuristic and feasible car if there is a will to unite! And kudos for the achievement from Ratan Tata

Anonymous said...

Great points! I completely agree on the high end bike lovers buying for functionality point. I guess where Nano is going to be a big hit is among the government and traditional industry employees with income of 20-30k whose income is going to stay at the same level and for whom, owning a car was a dream.

sra said...

Ganesh, I can't help wondering about the congestion on the roads. Aspiration is fine but what if it gets choked in reality, or chokes reality? We all know our development is lopsided, be it small or big cars or fancy airports miles away from the city without easy transport options!

Subho Ray said...

All car companies should be asked to make roads in proportion to the number of cars they sell annually. Else, we will all have multiple cars but never reach anywhere.