Nano is world's cheapest car
The potential impact of Tata's Nano has given environmentalist
nightmares, with visions of the tiny cars clogging India's
already-choked roads and collectively spewing millions of tons of
carbon dioxide into the air.
Industry analysts, however, say the car may do for India and the
developing world what Ford's Model T did for America nearly a
century ago - deliver unprecedented mobility to the masses.
"It is a potentially gigantic development if it delivers what
has been promised," said John Casesa, managing partner for the
Casesa Shapiro Group, a New York-based auto industry financial
advisory firm.
"I think there is immense unmet demand for a vehicle of this
type, because it effectively eliminates the great leap currently
required to go from a two-wheel to a four-wheel vehicle," Casesa
said. "They are creating something that has never existed before,
the utility of a car with the affordability of a motorcycle."
The basic model will sell for 100,000 rupees, or about $2,500,
but analysts estimate customers could pay 20 percent to 30 percent
more to cover taxes, delivery and other charges.
Company chairman Ratan Tata, who introduced the new car at
India's main auto show, has long promised a $2,500 "People's Car"
for India - a country of some 1.1 billion where only seven of every
1,000 people own a car. That vow has been much-derided by the
global industry which said it would be impossible without
sacrificing safety and quality.
"A promise is a promise," Tata told the crowd after driving
onstage stage in a white, luxury edition Nano, his head nearly
touching the roof. Four company executives emerged from another.
Tata says the Nano can sit five.
The company will not say how the price was kept so low on the
basic version and won't say how much the luxury Nano will cost
until it hits showrooms toward the end of this year. The company
also refused to let reporters sit in the car, let alone drive it.
But the basic version is austere: there's no radio,
passenger-side mirror, central locking or power steering and only
one windshield wiper. Air conditioning that would spare motorists
the brutal Indian summer is available only in deluxe models.
The little car, with its snub nose, sloping roof, and slightly
bulbous rear, makes it look like another Indian icon - the mango.
The Nano's appeal, though, is not its pedigree but its price -
targeting people moving up from the lower ends of India's
transportation spectrum, where two-wheeled scooters selling for as
little as $900 are often crammed with entire families.
The Nano's closest competitor is the Maruti 800, a four-door
selling for nearly twice as much.
In terms of performance it doesn't offer much more than the
Model T. The Nano has a two-cylinder 0.6 liter gasoline engine with
33 horsepower, giving it a top speed of about 60 mph, according to
Tata. It gets 50 miles per gallon.
The Model T cost $825 in 1909, comparable to about $19,000 in
2006, according to an aggregate of Consumer Price Index figures.
And the Nano bests the Model T's 20-horsepower, four-cylinder
engine, which topped out at 45 mph.
Analysts believe the Nano could transform the auto industry,
forcing manufacturers to lower prices, and perhaps find cheaper
ways to sell cars than in sprawling showrooms. French auto maker
Renault SA and its Japanese partner, Nissan Motor Co., are trying
to find ways to sell a compact car for less than $3,000.
"Most of the other carmakers are watching this development very
closely," said S. Ramnath, an auto analyst at Mumbai-based
brokerage firm SSK Securities Ltd.
For now, the car will be sold only in India, but Tata said it
hopes to export it to developing nations across Asia, Latin America
and Africa in two or three years.
Tata initially plans to manufacture some 250,000 Nanos per year.
That would be about a quarter of all cars sold in India last year.
The emergence of the Nano has fueled a host of concerns.
With developing countries like India and China putting more and
more cars on the roads, it has created a greater demand for fuel,
contributing to sky-high global oil prices. India consumed nearly
120 million tons of petroleum products in 2006-2007, according to
the Petroleum Ministry, up from 113 million tons the previous year.
And the idea of such a low-cost vehicle has environmentalists
petrified, conjuring images of traffic jams at midnight, hours-long
commutes and rolling clouds of pollution.
Chief U.N. climate scientist Rajendra Pachauri, who shared last
year's Nobel Peace Prize, said last month "I am having
nightmares" about the car.
"Dr. Pachauri need not have nightmares," Tata said at the
unveiling, promising the Nano met all current Indian emission
standards.
Girish Wagh, who headed the design team, said the car has an
oxidation catalytic convertor that emits 120 grams of carbon
dioxide per kilometer.
Tata's promises have not reassured everybody.
"If you're talking about urban environment, it will cause
serious problems," said Jamie Leather, a transport specialist with
the Asian Development Bank. "The cheaper and cheaper vehicles
become, the quicker those pollution levels will increase."