Tata's Rs. 1 Lakh Car: An update

The much awaited Rs. 1 Lakh car is due to be showcased at the Auto Expo in Delhi in 2008. With its arrival, one should also foresee the various issues that arise consequently.

In an interview to 'The Week' magazine in 2005, Mr. Ratan Tata, the Chairman of Tata Sons, reiterated his commitment to development of the “People’s Car”. According to him the car would be priced in between motorcycle and a car and the target market would be the lower middle class families. To families in India that use two-wheelers, with the wife holding a kid at the back of the two-wheeler, it certainly is a much safer mode of transportation. It really is a novel idea in that regard. However, the real issues arise when the car starts selling in India and other developing countries.

The strategic pricing of the car would attract two major groups of customers. The first is the category of customers who are upgrading from two-wheelers to cheap small cars and the second category is ‘First-time’ buyers. In a country like India where one of the major modes of transportation is two-wheelers, such a new category of vehicle is certainly going to have an adverse affect on domestic two-wheeler market and is also going to open up a new category in the already growing automobile market. The car is small and should be easy to drive around in city traffic and coupled with its price, it will definitely attract first time buyers as well.

From the business point of view one has to agree that such a project of developing a people’s car itself is commendable but there are opinions otherwise. Firstly, the car is surely going to sell in numbers because of all its features and more importantly the price. The more the number of cars the more congestion there is on the roads especially when every driver in every major metropolitan is starving of minimum road space.. What India should be concentrating at the moment is to develop clean and efficient Public-Mass Transport systems. Secondly, the projected sales of the car is surely going to add to the already rising pollution and CO2 levels thereby adding further burden on the environment and the economy.

My point of view however is on the technological aspect of the car. The need of the hour in the country in the backdrop of global warming is to have vehicles that run on more efficient and cleaner fuels. Many companies have launched vehicles and showcased technologies in this regard. For example, Toyota and Honda have made giant strides in bringing out hybrid cars that run both on gasoline and electric power. Some companies have also brought out electric cars. Vehicles that run on hydrogen have also been developed. These hydrogen vehicles’ only emission is water-vapour. Even vehicles that run on alternative fuels like Ethanol have also been developed. So even though the people’s car is a welcome thought, it should have been given a second thought in favour of more efficient and cleaner vehicles rather than on making a car that is sure to contribute to the already rising chaos on our roads.