Saturday, January 12, 2008

India's doomsday machine?

Among those destined to be most badly affected by a new machine announced in India this week are its intended beneficiaries: people in developing countries.

The new product is a car priced to compete with motorcycles. By far the world's cheapest car, Tata Motor's new "Nano" is expected to sell for only $2,200.

Possible Impacts of the Nano Car:
  • Rreferring to the low-cost car, Chief United Nations climate scientist Rajendra Pachauri, who shared last year's Nobel Peace Prize said, "I am having nightmares."*
  • More congested roads: Imran of Hyderabad told the Times of India: "I would like to leave India the very day this car comes on road. I cannot imagine commuting for 4-5 hours between my home and office (because of the congestion)."
  • Pressure to invest more in highways and road infrastructure. Such projects would likely come at the expense of upgrades in rail transport systems.
  • Sales of two-wheelers is expected to decline. (On the other hand, sales of motorbikes may increase if motorbike prices drop in response to competition from the automakers. Either way, the added competition probably spells lower profits for two-wheel vehicle manufacturers).
  • Increased steel prices and fuel prices.
  • The Nano may spell the end of the auto-rickshaw or tuk-tuk.

Related Trends
  • This cheap car designed for India is also intended for export and Thailand tops this list: "Another component maker Rico Auto has entered into a long-term supply agreement with Tata Motors. It expects to make Rs 2,200 on each Nano car sale from its ancillary supplies. Rico Auto may also take its tie-up forward to Bangkok where Tata might expand soon."
  • The Japanese government -- which funds the construction of roads and bridges in places like Cambodia -- may wake up to discover that Indian auto-makers have become the major beneficiaries of its foreign aid.
  • Indian peasants, a number of whom were relocated to make room for the Tata plant, are protesting the new car, claiming Tata Motors promised them good jobs which have not materialized.
  • What Nano is to automobiles, "One Child Per Laptop" (OLPC) is to personal computers: a low-priced alternative designed specifically for consumers in the developing world. (I have blogged about the OLPC/XO Laptop program).
Specs for Tata Motor's Nano Car
  • The four-door subcompact Nano has a two-cylinder 0.6 litre gasoline engine with 33 horsepower, giving it a top speed of about 100 km/h (60 mph), according to Tata. It gets 21.2 km per litre (50 miles per gallon). More Nano car specifications here.
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*Any new global warming treaty that fails to mandate emission limits for India and China looks increasingly pointless
Nano car specifications: Tata Motors website, Reuters,
Times of India (mentions rival low-cost vehicles)
Other perspectives: Blogging from Bangalore,
Bhanu provides both an original perspective and critical analysis of the Nano car (see also Bhanu's remarks in Comments, below). The Washington Post also has worthwhile coverage of Nano: see this story for more background, this commentary by Mira Kamdar for an elaboration of environmental concerns (and hopes), and this chart which shows how the Nano car stacks up against the Model T Ford.

5 comments:

  1. This news article was full of prejudices. Excuse me Sir why are you worried if Indian middle class gets car they always dreamt for.
    The basic philosophy behind this car is simple "To provide the Indian middle class a safe and cost effective medium to commute."

    Though the env concerns may be valid but who has done the study? who knows how many of those highly polluting 3 wheelers will be reduced because of this vehicle?

    its a revolution in manufacturing, I hope you understand what do we mean if we say that we are providing a car at half the price of today's cheapest car.

    Its a time to appplaud the manufacturing team that has slogged for the last 5 years to complete this seemingly impossible task, but still if you want to have sleepless nights..your wish!

    ReplyDelete
  2. The basic philosophy behind this car is simple "To provide the Indian middle class a safe and cost effective medium to commute."

    What about the poor Indians? Has India provided public transit infrastructure to meet the needs of millions of Indians who can't afford even a cheap car?

    Though the env concerns may be valid but who has done the study?

    The effects of automobiles on the environment are well documented. I don't think we need new studies concerning the impact of cars on the quality of the urban environment; their contribution to global warming, resource depletion, etc. -- these have been documented.

    How many of those highly polluting 3 wheelers will be reduced because of this vehicle?

    That's good question, you point to one likely positive impact of the Nano car.

    its a revolution in manufacturing . . . It's a time to applaud the manufacturing team that has slogged for the last 5 years. . .

    One big thing I overlooked in writing the post was this: you can't judge a car by its specs. Plenty of cars look great on paper, but are not easy to operate or they don't last (they're lemons). The trick is not just to build a $2,500 car, but to build a $2,500 car that lasts for many years and doesn't require frequent servicing.

    If this $2,500 car is not superbly well designed, it could well be the world's first "disposable car," something you drive for couple years and then have to throw away. That would make it the ultimate environmental nightmare.

    In any case, I won't be congratulating the engineers until my questions about the car's reliability and durability have been answered by consumers.

    Of course, this car might well be pure marketing hype, in which case I would have to agree that there's nothing to be concerned about here.

    ReplyDelete
  3. Bhanu, I really enjoyed your blog post concerning the Nano car:

    http://blogginmystory.blogspot.com/2008/01/westerners-may-have-never-thought.html

    ReplyDelete
  4. I won't be congratulating the engineers until my questions about the car's reliability and durability have been answered by consumers.

    In fact none of us should! but dear, TATA is a name to reckon with in India, and the best thing is the honesty with which TATA has worked on this project throughout. I have enough reasons to say that TATAs won't hype a thing without substance. A group that has a business of $65 bn is surely not gonna risk its image for peanuts(read 4000 indian RS/ car shipped that they r supposed to earn). Though from an outside perspective your concerns are perfectly reasonable and valid.


    Moreover I would like to commend your blog, I have never come across such an informative source about Thailand/world politics, will continue to look at this space

    ReplyDelete
  5. Patrick HenryJanuary 15, 2008

    Thank God that the Americans
    did not come up with this half a
    car, roller skate,idea. I could see it now masses of people burning themselves to make a point.

    Only when a national company puts the screws to their own does it read better. The revolution was
    the Tuk Tuk this is a make believe
    go kart. Tata is not creative
    They stole the idea. Why the price
    issue India has all the outsouring it needs to make a better economy.

    Its nothing more than a Yugo or
    You wont go !

    ReplyDelete

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