Business Drive

Tata launches Nano with eye on South Asia

Arindam Mukherjee

After five years of speculation and scepticism, Tata Motors’ much-awaited Rs 100,000 car is finally here - and has the look of a serious contender in the Indian and South Asian automobile space.

Tata will begin exports to South Asian countries including Sri Lanka after fulfilling the domestic demand.

The Nano is India’s, and the world’s, cheapest car, which meets international requirements of styling, safety and emission at a fraction of the price offered anywhere in the world. Sure, the base version of the petrol-driven Nano will retail for above Rs 1 lakh (around Rs 1.30 lakh on road in Delhi) starting September 2008. But no one is grudging Ratan Tata when he says: “A promise is a promise, and we have delivered.”

The general feeling is that Nano will change the market dynamics in the small-car segment, particularly the mini or ‘A’ segment, which has the Maruti 800 as well as the Alto at present. Currently, the iconic Maruti 800 retails for slightly over Rs 200,000 (Rs.1 million in Sri Lanka after taxes), and the Nano is significantly cheaper.

At the other end of the spectrum are owners of motorcycles- seven million of them were sold last year - whom Tata is targeting. Says Yezdi Nagporewalla, national industry director, kpmg India: “A completely different segment would now be created. Every two-wheeler buyer is an aspirational four-wheeler owner. When you cut the price to this level, you are forcing the change.”

Also, the Tata car is sure to impact the booming second-hand car market, where prices are expected to crash significantly.

Of course, there are many who say the final impact may not be as dramatic.

Says auto enthusiast Murad Ali Baig: “The Nano is three times the price of an average motorcycle - this will not make people drop off their motorcycles overnight to go after this car.” Others feel the euphoria over the price tag could be short-lived.

Says Mahantesh Sabarad, senior analyst at broking firm Centrum: “At the price, the car is not commercially viable. It would be difficult for the Tatas to sustain the car at this level and feed the losses.”

While there will be higher-priced variants (including one with air-conditioning and, later, with diesel), the focus will be on the no-frills base version, which Tata assures meets all safety standards.

Tata, expectedly, is confident and is already talking of upping the production capacity from 250,000 units to 350,000 units in Nano’s Singur facility.

A majority of the demand is expected to come from semi-urban and rural areas. Says Tata: “Today, everybody focuses on the urban areas. We want to provide the masses in the rural part of India with a good means of transport that doesn’t exist there.”

And that is where some of the features of the Nano could come in handy. Says auto analyst Veeresh Malik, who has driven the car: “It has a nice, high ground clearance and features like power out (where the engine can be used as alternative power source) would appeal to power-hungry rural areas.”

The biggest challenge for the Nano lies in its ability to convince motorcycle users to upgrade. Iindustry players feel two-wheeler penetration remains low.

Says Shinji Aoyama, president and CEO, Honda Motorcycle & Scooter India: “The Nano isn’t cheap for a two-wheeler customer. What about the operating expenses? A 100-cc motorcycle gives 40-50 km per litre for one or two persons.” The Nano promises a mileage of 20 km to a litre.

The car has also attracted criticism from environmentalists like ipcc’s R.K. Pachauri. He, in fact, describes the proliferation of cars as a nightmare and reflection of the collective failure of public policy.

“We just do not have the infrastructure to support this kind of growth,” says Dr Pachauri, who heads The Energy Research Institute.

But for now, no one seems to be heeding these voices. While Tata says the consumer will decide, other auto manufacturers are getting into the act. As if to pre-empt Tata’s launch, Bajaj Auto showcased its concept small car on January 10 at the Auto Expo in the capital. Though the Bajaj car will not hit the roads before 2009-end, the two-wheeler major will soon ink a tie-up with global giants Nissan and Renault.

Then, of course, there’s India’s biggest car company Maruti Suzuki, which showcased its own concept small car, A-Star. Maruti has repeatedly said that a car priced below Rs 200,000 is unviable-and being the only player in the A segment thus far, it has the most to lose.

While Tata clearly has a first-mover advantage, it’s early days yet. For one, the competition will react-Maruti has already redefined the way Indians buy cars many times over.

Bajaj also has enough experience in dealing with Indian consumers. Experts say Indians treat the ownership of a car as an asset; if this is devalued, consumers may not like it. Rubbish, says another school of thought, which points to price being the key factor for value-conscious consumers.

Nano is slated to run proudly on Indian and later, South Asian roads by September this year.

By then, most would have dissected the car and formed an opinion. Either way, one thing is certain: with a true-blue low-cost car driving in, the transportation landscape in the region is set to change forever.

Designer cars, rage at ‘Auto Expo’

India’s most famous car designer Dilip Chhabria, popularly known as DC, has rocked the Auto Expo 2008 with his two unique creations: Ambierod and Supercar.

DC created ripples with his James Bond car for the movie ‘Die Another Day and a prototype of the Aston Martin AMV8 in 2003, was the Indian answer to the car designers of the west.

However the Ambierod and Supercar, priced at 1,018,071 US Dollars and 63,629 US Dollars, are a little too steep according to Indian standards. But then one needs to spend something extra for the exclusivity.

“Well, designer cars excite people because they are unique, they are exclusive and I feel there is a huge market, not many people are catering to the market because you need lot of depth and skills to make cars that are desirable,” said Dilip Chhabria.

“But globally we have seen that limited edition cars, designer cars, are really very much in demand because that caters to human psyche of giving him something that others don’t have,” he added.

The car modification industry in India as compared to the west is still in a nascent stage and experts are unanimous that matters will start looking up as there is more disposable money with people.

Cars can be modified to suit one’s pocket with a small investment and local designers can make a staid Esteem look like a Hot Rod that Vin Diesel drove in the movie Fast and the Furious.

Companies like San Motors cater to this growing segment in the Indian market.

“I think it has huge potential. We have seen it with DC who has come up over the years. We have seen it with lot of car modification guys who have come up and they have now made a proper business out of it.

Just five years is all it has taken for the Indian consumers to really start growing and spending a little extra to modify their cars and beautify their cars,” said Pavan Puri, modifier and distributor of San Motors.

About 150,000 auto buffs are expected to visit the show. Rising incomes and new models are boosting car sales in India where only 8 people in every 1,000 own a car, compared to 300-500 in many western countries.

Annual passenger vehicle sales are forecast to double to 2 million units by 2010. Small cars currently make up nearly two-thirds of the domestic market. (ANI)

Frontier Automotive celebrates Land Rover victory

Frontier Automotive, sole agents for Land Rover in Sri Lanka, celebrated Land Rover’s spectacular performance at the recently concluded Malaysian Rain Forest Challenge 2007 in which the Sri Lankan Team No 101 “TEAM FRONTIER AUTOMOTIVE -LAND ROVER” Indika Sanjaya and Navin Marapana emerged 1st Runners Up (Diesel Category) the Malaysian Rainforest Challenge 2007 is the toughest , most internationally represented 4x4 Event in the World.

Amongst those who sponsored the Sri Lankan team were Frontier Automotive Pvt Ltd - Main Sponsor, the Sports Ministry of Sri Lanka, Gamini Lokuge, Minister of Sports and Public Recreation, Thilanga Sumathipala - Chairman BPO Services Pvt Ltd and Cashian Herath.

Land Rover’s sweeping victory at the recently concluded 4 x 4 Challenge 2007 was also simultaneously celebrated as Land Rovers were placed first, second, third and fifth.

“Land Rover’s dominance on the results board was significant and in fact Land Rover won the Team Prize for the event and took first place in the category for Novices as well”, said CEO Frontier Automotive, Sheran Fernando.

Sri Lankan Team Frontier Automotive-Land Rover duo of Indika Sanjaya and Navin Marapana emerged 1st Runner-Up (Diesel Category) in the toughest and most internationally represented 4x4 off-road event in the world, the Malaysian Rainforest Challenge 2007 (RFC 2007) concluded in Terengganu last month.

“The duo improved on their previous performance to emerge runners-up only 23 points behind the winners Team Demark in a hotly competed tenth anniversary edition of this challenging international competition which had to go into evacuation mode titled the Monsoon War Zone - The Great Escape”, said Fernando.

As the Sri Lankan duo made their official announcement of the results their vehicle is in the process of being shipped back to Sri Lanka, having had to wait for a month for floods to recede and jungle paths made passable by RFC rescue teams.

“Having been edged out in a prematurely ended competition, will they go back to claim their first place in 2008 is a question only time will tell, however we at Frontier Automotive will be behind them all the way”, said Fernando.