The Tata Motors Rs. One Lakh car story
Will Tata's Rs. One Lakh car be the Sitara
of our eyes?
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Yesterday, we came to know about a Rs. One lakh car. The car will transport four people, and is supposed to be a bridge between two-wheelers and cars. Only, this wasn't Ratan Tata's famous people's car.
The Sitara, the four-seater car in question is hardly a car. It wasn't made in India either. Launched by Habib Motors in Pakistan, this is a bare-bones four-wheeler. Sporting a 175 cc engine, the Sitara is an open top city-cart. The car runs on petrol, has a 10-litre fuel tank and a four speed manual transmission. It can achieve a top speed of 60 kmph.
We can be almost sure Tata's proposed Rs 1 lakh car will not look anything like this. It will be a no-frills car, yes, but it definitely will not look like a cart, or a four-wheeler autoriskshaw. This is not to take away anything from Habib Motor's heroic attempt. Maybe it is not a proper car or a microcar, but perhaps there is a market in Pakistan for a rickshaw-scooter-cart crossover. I have no clue. Look at it as a four-wheeled motorcycle or scooter, and perhaps all those who have attached sidecars to their scooters and travel with an entire nuclear family in it in India could buy it.
A Sri Lankan microcar - Rs 2.4 Lakh approx.
We are pretty sure this is nowhere near Tata's car because of one reason - coming out with something like the Sitara would have been too easy for Tata, and they would have already done it if they wanted to.
The latest confirmation on the Rs. 1 lakh small car project came from Ratan Tata himself after the launch of the 'no-frills' hotel. "The Rs 1-lakh car is being developed by us. It will hit the road in three years," Ratan Tata said. It would probably take Tata Motors three months to develop an Indian Sitara. Three years is a reasonable period in which a decent, socially acceptable microcar can be developed. The proposed peoples' car would not be a stripped down version of any existing car. Rather, it would be a ground-breaking experience for Tata Motors, Ratan Tata had said. He had also said that the Rs, One lakh car would meet global safety norms and emission standards. That is going to be one tough task.
Two questions arise: Will it become a reality? If it does, will a sizeable number of people buy it?
Tata Motor's competitors do not - at least publicly - believe it is practical. Business Standard said that 'with taxes accounting for almost half a car's ex-factory cost, Tata will have to produce a car within Rs 70,000 for it to be priced at Rs 1 lakh in the market. At present, they say, it is not possible to make a car for less than Rs 1.5 lakh and costs will only increase over the next five years.' Maruti Udyog's Jagdish said that he did not believe it is possible for Maruti to bring out a car model that costs less than Rs. 1.5 lakh. In the next few years, the possibility of having to meet Euro III or IV emission norms would make it even costlier, according to him.
Hyundai said that it did not believe it is possible for such a car to meet safety standards.
Let us look at Tata's past to find an answer for this.
Remember the one year before the Indica was launched? We had read it over and over in the newspapers and magazines that Tata was working on a car that had the space of a Hindustan Motors Ambassador at the price of a Maruti 800.
Finally, what did we get? We got the Indica, which had nearly the interior space of an Ambassador, but the price was not met. The car cost less than other comparable cars in the market, and was excellent value for money. Seems like that was a case of good intentions that didn't work out as well as expected.
Consider that prices now range from Rs 40,000 to Rs 60,000 for your average 125cc-180cc motorcycle. These prices are inching up. The top-end price for this type of motorcycle would be Rs 70,000 to Rs 80,000 in three years, which is when Tata is expected to launch its Rs. 1 lakh car. The price difference between this kind of a two-wheeler and Tata's car would be Rs 30,000. It is unlikely that Tata would be able to meet that target. Also remember that it has not been specified in cast-iron terms that the car would cost Rs 1,00,000 THEN. Accounting for inflation, Rs. One lakh in 2007 would be something like Rs 85-90,000 today? (I am bad at this - would appreciate if some reader can give me better figures!) Also, consider that most likely, the car would have a larger engine leading to higher costs.
There have been reasonably good microcars with 600-800 cc engines. Tata Motors do not employ loudmouths, and it is quite possible that they may produce a brilliant automobile. It is just the Rs. One lakh that we are doubtful about. So what if it costs a little more? The critical thing is to make it affordable to those who would not otherwise buy a car.
Next question: Will anyone buy it?
Ah, wish we had a psychologist working with us.
This is the real 0.1 million rupee question! Would it be embarrassing to be seen in a car everyone and his dog costs only Rs One lakh, less than some two-wheelers expected to be in the market by then?
Our guess: If the car looks obviously 'no-frills', no. Indians are pretty much status conscious, and few would want to see the smirks. If the build quality is good, it may sell in some villages, but then it won't be the 'people's car' we expect.
Let's say it costs what Tata says it would, but looks stylish or cute. Things change then. A combination of price, apparent safety, looks which you could fall in love with, no autorickshaw sounds, sufficient power and we may have a cult car that people can't resist buying.
Our prediction: That is Tata's chance. Build a car that costs around Rs one lakh, meet safety and emission standards, but make it look adorable. When you have that lovability factor in a four-wheeler, it has proven irresistible for cars worldwide. That is Tata's only chance to make people forget it costs only Rs One Lakh. Speed does not matter, neither does a large engine. Aren't autorickshaws the fastest off a traffic signal and the quickest way to reach point B from point A in most of the cities?!