On the day of its introduction to the international community, Mr. Ratan N. Tata was quoted saying, “Tata Motors’ engineers and designers gave their all for about four years to realise [sic] this goal. Today, we indeed have a People’s Car, which is affordable and yet built to meet safety requirements and emission norms, to be fuel efficient and low on emissions. We are happy to present the People’s Car to India and we hope it brings the joy, pride and utility of owning a car to many families who need personal mobility.”
Holding the Guinness Book of World Records position for cheapest car at a starting price of Rs. 100,000 (~$2000 USD), the Tata Nano was designed for the working class in India. Currently, there are more two-wheelers (motorcycles, scooters, and mopeds) on the road than cars in India. Tata Motors seeks to change that by targeting a crowd that would otherwise purchase two- wheelers. In addition to its affordability, the car is also known for its fuel efficiency, boasting a gas mileage of 20 km/liter (~56 mpg).
The production of the Tata Nano holds many promises for both domestic and international markets. Firstly, the Tata Nano is projected to expand the Indian car market by 65% according to the rating agency CRISIL. In fact, in anticipation of the Tata Nano, the market for two-wheelers has plummeted as buyers look to purchase this new four-wheeled vehicle. The car’s fuel efficiency seems to be a main attractors in a nation where diesel prices still remain around 50 rupees per liter (~$3.86 per gallon).
With the current energy crisis across the world, the Tata Nano just might become world’s cure for international consumers. . With its trendy design, fuel efficiency and affordability, the Tata Nano will likely spread to international markets, thus allowing India an entrance into the car export market. However, it is unlikely that the car will hit American or British markets because of its relatively poor emissions and safety standards.
In fact, the vehicle is receiving much backlash from critics due to its poor emissions from using diesel fuel. In a country where air pollution has already reached intolerable levels, any additional air pollution is unacceptable. Daniel Esty, an environmentalist at Yale University, sees the Tata Nano as a source of huge destructive potential. “This car promises to be an environmental disaster of substantial proportions,” Esty said. In response to this criticism, Tata announced its plans to produce a gas- or electric-variant as soon as the current model hits the market. Countries have also cited the safety standards of the Tata Nano as hazardous, calling it a potential deathtrap.
However, in a country where lorries and other large vehicles dominate the roads in big cities and villages, accidents will always be a problem; auto-accidents claim the lives of about 90,000 people per year in India. As the number of cars increases, the risk of auto-related accidents would also increases, especially due to India’s poor road conditions and the lack of traffic signals. Despite these speculations, Tata Nano has passed the international guidelines for the full frontal crash test, the offset, and side-crash test.
So even if the Tata Nano is not exported to the international market and produced exclusively for India, other car companies are certainly impressed with its ingenuity in design and are looking to emulate the affordability of the car in their models. When asked about the Tata Nano, CEO of Renault-Nissan Carlos Ghosn said, “This is really fantastic. This is what we should try and achieve.” Already, Bajaj Autos is working with Renault Nissan to produce a competitor vehicle of nearly the same specifications.
As of now, Tata has yet to announce a release date for the vehicle. Unfortunately, there exist quite a few setbacks for production. With increasing material costs, the price of Tata Nano could be higher once in commercial production. Because Tata’s most unique quality lies in its affordability, an increase in price could and would its expected sale figures. As such, Tata must either use cheaper materials or ask the Indian government for tax-breaks and subsidies in order to lower the prices.
Whatever the future of the Tata Nano, the hype surrounding this car has made a clear statement to to automotive makers around the world: a car’s price tag – not safety or luxury – will ultimately drive its dominance in developing countries.