Lately it seems like everywhere you look people are starting to move up as fast as George and Weezy. Prices on typically expensive goods are coming down so that companies can make a play for the disposable income of the world’s vast middle class. Monday’s L.A. Times brought us word of a ridiculously priced car out of India:
Tata Motors Ltd. is set to unveil the world’s cheapest car as early as January as it takes the growing interest in low-cost vehicles to a new extreme.
The Indian carmaker will launch its $2,467 vehicle by the third quarter of 2008 and may unveil it at January’s Auto Expo in New Delhi, Managing Director Ravi Kant said.
Separately, Tata Motors is developing a line of small hatchbacks and mid-size sedans to be introduced next year. India produces 1.3 million cars a year. With the market growing at 10% to 12% per year, this could reach 3 million within a decade.
The four-door car — a pet project of Tata Group Chairman Ratan Tata — would be the cheapest by far in its class. The current cheapest, the Maruti 800 produced by Suzuki Motor Corp., sells for more than $4,000. [Link]
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Just to clarify, I don’t think that a really cheap car is ridiculous. No. What I find crazy is the exact price. Somewhere there was a room full of marketers that decided that $2,467 was the exactly right price for this car! I mean, why not $2,499? But this is going to be a hooptie right?
Competitors are skeptical about the price and quality of the car, which the group says will have a 600-cubic-centimeter engine and come in a range of models.
However, [Managing Director Ravi ] Kant said: “It will be a good-looking car which you will want to purchase…” [Link]
Well, okay then. The Christian Science Monitor had an article last week that hinted at how owners of such a cheap car might immediately seek to pimp their ride:
While its materialistic glamour revolution is still in its infancy, the new capitalist India is all about keeping up with the Kumars. At all socioeconomic levels, Indian shoppers are becoming more “aspirational,” using their new wealth to buy status in a country where social cachet is a vital commodity.
“From the guy at the bottom moving from buying soap to buying shampoo to the guy at the top trying to act like his global counterpart, this is the first time that Indians have been able to afford discretionary spending,” says Subbu Narayanswamy, a Mumbai-based analyst for the consulting firm McKinsey & Co…<
p>”What the Indian consumer wants is the latest technology, and in the premium car segment they’re looking for a fully loaded car,” says Linus Schmeckel. “They don’t like to be seen as second-class consumers…” [Link]
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p>Of course, there is a downside to all of this. Increased spending means increased consumption means increased waste and carbon emission. I realize, however, that it is hypocritical of me with my nice things to lament someone buying a $2,467 car just because it will allow a greater segment of the population to pump out greenhouse gases (given the fact that doing so could improve their economic well-being). That is after all the main argument that China uses in rejecting Kyoto. “Poor nations should be able to produce and consume in a more inefficient manner until their populace is raised out of poverty. Until then rich nations should carry the burden.”
Hmmm, maybe I will just focus on the cool things you can deliver to the masses when you use technology to make things cheap.
http://www.rediff.com/money/2007/jun/04tata.htm
The car’s going to be sold for 100,000 Indian rupees – looks like it translates to $2,467.
What do you mean? The price is in rupees and converts to a not so nice number.
I find it surprising that abhi couldn’t figure this out for himself. Abhi, you ok?
The first thing that struck me about this was pollution, greenhouse gases and the like. I’m surprised there haven’t been any posts – or did I miss them – on the carbon cap debates at the G-8 summit, especially since India and China figure so prominently. India’s argument that its per capita greenhouse gas emissions are low and therefore do not merit capping seems unsatisfactory – considering too that in overall terms India is reportedly the fifth largest emitter. I’m referring to this clearly unsympathetic story here. The stance seems to boil down to: No we won’t reduce our greenhouse gases. But we will do it if you cover the costs.
If this is the zero-sum game that is going to be played out, we can just watch the Sundarbans being washed away. There’s also some level of contradiction here. We won’t take or need foreign assistance for Tsunami relief because we are so past all that, but we want you to pay us to curb our greenhouse gas emissions. We are a rapidly growing economy and we are “shining” but our farmers continue to commit suicide in droves. I should note that I’m not taking Bush’s side here or endorsing his environmental policies or lack thereof. The current U.S admin’s stance is far more frightening than any argument India has currently come up with. But the utterly one-sided picture of India’s urban consumer explosion as the single index of its celebratory rise on the global stage of prosperity and everlasting happiness is just dispiriting.
P.S when I noted the absence of posts on the G-8 debates, I was not including the current post that in fact does address the issue in passing. Thanks for the link to the cool MIT 100 dollar laptop project!
It’s been a heated race to become the first manufacturer to make the 1 lakh car and thats roughly $2467. It’s like what Toyota did with Scion- quality entry level car, no negotiation on price (1 lakh), and offer all the accessories to pimp it out.
Yeah, but India turned down the $100 laptop offer and is trying to build a $10(!) laptop. Currently they have been able to manage till about $50, which is around a third of $150 the MIT laptop currently stands.
There was an interesting article in Spectrum(login may be required) about the impact the laptop may have: not all of it positive. Personally I don’t think a laptop leads to a major productivity gain unless you also have access to the internet (which is an additional cost in this case). Even in that case, a desktop may do just fine and may need to be replaced less frequently.
It is hypocritical indeed. Some of the Western MSM are already blaming India and china for global warming. Take for example this news story done by BBC’s Ethical man. He flew all the way to India just to do this story, when somebody from BBC India could have done that.
According to a new survey Indians are most concerned about global warming. Take the case of CNG vehicles in New Delhi, I don’t know of any other major city in the world who implemented that kind of policy.
You can find some information here and here. I think Chinese and Indian government are spot on about this issue, at least they are acknowledging the problem, while Western countries are still debating about the threat of global warming.
Just to clarify, I don’t think that a really cheap car is ridiculous. No. What I find crazy is the exact price. Somewhere there was a room full of marketers that decided that $2,467 was the exactly right price for this car! I mean, why not $2,499? But this is going to be a hooptie right?
As Indians, we are so sorry we did not bow to the American overlord, and price our car in US Dollars. The car is priced at Rupees 1 Lakh, i.e. Rs. 1,00,000 (That’s not a misplaced comma. The Indian numbering system works, and there’s nothing wrong with it).
1 lakh is a psychological barrier. To make a car at the price is a Big Deal. In India.
Weinies … chek out the origino sub 100K car. And then, this version for $13K can give a lamborghini owner a case of penis envy.
More ass, less gas.
fyi.. previous coverage of the car on SM…
The MIT media lab is a bunch of technocrats who seem to think that technology, be it through their Media Labs in Asia or Europe (which were both shut down because the governments saw absolutely no benefit from them) or their current laptop project, is the panacea for all the world’s problems. Yes, technology can certainly help, but the absence of laptops is not the primary reason for illiteracy in India, Africa, Uruguay etc. It would be fine if they pushed their ideas on their own, but they utilize their MIT cachet to require huge investments from the host countries – money that can certainly be more effectively spent elsewhere. At this point, their credibility in the developing world is not exactly sky high, and for good reason.
Oh, and by the way, their $100 laptop project is no longer that. They’ve changed the name to OLPC (One Laptop Per Child) since their unit cost is roughly $150 right now.
I thought it was good sarcasm, until I realized that “Humor” wasn’t one of the categories for this post.
Even if new cheap cars will increase the number of cars on the road and accompanying pollution, the price of petrol will stay high – it’s much higher as a proportion of one’s income in India than it is in the US, because it’s taxed more and India doesn’t have a sweetheart deal with the Saudis (yet). The Indian govt has been fairly forward-looking on pollution matters, subsidising CNG and requiring its use for public transportation. And with the development of the metro in Delhi, there are already far fewer scooters and two-wheelers on the road, and even if you have a small car, the availability of good public transportation often means you leave it at home most days. I think we’ll approach the environmental implications of more cars on the road more sensibly than the Americans did.
knock this car if you will, but Tata is also working on a car that runs on WATER. yes WATER. not good for long distances, but if you live in the urban areas, who cares? you’re not going very far anyway. imagine what this could do to the air in delhi, bombay, bangalore, etc.
oh yeah they’re also partnered to work on this:
http://www.autoblog.com/2007/06/11/autobloggreen-interviews-miguel-celades-sales-manager-for-the-a/
a car running on compressed air? another savior to the air quality of india. at least tata is trying some green solutions.
Big deal. There was this guy a long time ago who walked on WATER! In hide sandals, not Nike’s!
What?! You must tell me of this miraclulous man! How is it that I have never heard of him??
DJ! I’d link you to some clever youtube clip but I’m on 56k dialup modem….which predates that guy who walked on WATER.
This is he.
…and with the speed of a Maruti 800 doing 0 to 60 in 35 seconds, I present you the guy, who a long time ago, walked on WATER.
My bad guys. Blogging in the late evening ain’t a good thing.
Sorry I missed that
I’d like to remind you good people that missionary activity is strictly forbidden and so you must be part of a vast anti-national plot to turn all our youth away from their heritage and authentic spiritual roots. I think I’m going to have to report y’all to Vasundhara Raje/Uma Bharati/Jayalalitha.
Vaat, India is not good enough for the Joneses?
Aah, Abhi’s already addressed the first two things I thought of when I read this, in #22. Yeah, 1 lakh is a nice number and yes we have discussed this before.. lot of discussions on price being low due to less safety features, and concerns about pollution. Speaking of pollution, India was at the G8 and along with China did express interest in curbing it’s pollution levels (don’t know what exactly that would mean). Wish GBW had taken the lead on curbing greenhouse gases instead of saying they will ‘consider the proposal’. In the meantime, we can now get us a 0 emission house.
Crap, I missed #4 before I posted, G8 has already been mentioned. Sorry…
From the L.A. times article, “Tata’s car will not conform to European safety and emissions norms. However, Tata, which sells cars in South Africa and a few European markets, said it could be upgraded should it choose to export.”
–> I thought India had agreed to impose the Euro II(or whatever is the most recent emission standards). So, Tata is discriminating against indian consumers to keep costs down ?
Sakshi :
“Personally I don’t think a laptop leads to a major productivity gain unless you also have access to the internet (which is an additional cost in this case). Even in that case, a desktop may do just fine and may need to be replaced less frequently.”
–> I dont think XO is targeted as a productivity tool. It is meant for kids 6 – 12 as a learning tool(Core principles of $100 laptop – http://wiki.laptop.org/go/Core_principles/lang-en). Internet access is crucial for their current mission(as they have defined it) but I think they have a solution for it. And, I think they prefer it to be called as a education initiative, not a laptop project. 🙂
Rahul :
“It would be fine if they pushed their ideas on their own, but they utilize their MIT cachet to require huge investments from the host countries – money that can certainly be more effectively spent elsewhere. At this point, their credibility in the developing world is not exactly sky high, and for good reason.”
–> XO is not a for-profit initiative, is it ? In developing countries, there are always competing priorities. Isnt educating kids and making them comfortable in computers a good enough priority ? For a laptop with innovative features, I dont think the expectation that developing countries pony up their share is unfair. Whether those developing countries will consider it as a high priority is a different matter.
Yes, and I am glad India has the good sense not to prioritize this effort. I could see a case for this in inner-city schools or other such places where the problem is not infrastructure, but in a place which lacks buildings, power, and water, I really don’t think a computer that costs multiples of families’ annual income is the primary necessity.
I agree completely. (Probably the first time with the Chinese government policy). It is awfully arrogant of western nations to dictate to poorer nations how they should use their resources. Average person in US uses close to 10 times the water that an average (not the gated community residents or the urban high-rise residents) person in India uses. Water doesnt getup on those tanks on it own you know. Greenhouse gases must be emmitted in order to keep lawns in Phoenix green. Why does North European countries and US continue to live in cold environment where they need heat during winter? If they are so worried about carbon emmission why not turn off heat in winter (similiary turn off air in summer) It is easy to pontificate to the poorer nations about their carbon emmission.
I am all for this new car. I think more cars with people will make the Indian government take us the issue of improving roads and thus creating better business environment.
Rahul: “I could see a case for this in inner-city schools or other such places where the problem is not infrastructure, but in a place which lacks buildings, power, and water, I really don’t think a computer that costs multiples of families’ annual income is the primary necessity.”
–> I think XO is designed with the lack of infrastructure in mind. It consumes much less power than current laptops and can be charged using a hand crank. OLPC is targeting XO through education ministries of these countries so it is upto these countries to decide whether they are willing to devote a significant portion of their budget. Taking the specific case of India, why wouldnt it be beneficial to distribute these laptops to kids in primary schools ? After all, dont we mandate compulsory primary education ? While I can see efforts from Intel and competitors to muddy the pond(as far as benefits to these ministeries go), I think XO would be a worthwhile investment if it is coupled with the primary education initiative.
Of course, there is a downside to all of this. Increased spending means increased consumption means increased waste and carbon emission.
Wow! I guess the brown man & his family should wait meekly at the bus-stop for the next over-crowded bus. Is this the environmental twist to the imperial mind-set?
I should qualify my comment #29 with the following: The poorer nations suffer from bad quality of air in their urban centers and it is upon them to come up with energy sources that would not pollute the air, as it affects quality of life of people living in the area.
I think those of us who believe in reducing carbon emmission should focus more on showing the harmful effects of carbon emission on human quality of life and create a popular movement that will make societies (mainly at local government level) make choices that takes reducing carbon emission in policy making.
I would like to discuss what measures are being taken to reduce flatulence in cows.
Does this mean cars will no longer represent ‘eshtatus’ in India?
when i was 5 years old, i discovered that the cooking gas in my grandfather’s house was methane from cow dung, and i refused to eat for 2 days. my grandfather, being both a farmer and a businessman, tried to impress upon me the virtues of this concept – direct line, kanna! recycling! no money wasted! clean gas! (this one i blatantly rejected) – but i took my time mulling it over. too bad i didn’t have the greenhouse gas facts to counter him back then. not that he would have cared – no money wasted was to him, like most desis, the real selling point.
Nope, it will just create a market for these decals.
I have two words: AIR CAR!!! Tata motors is working on the air car as well. They could make that at a lower price point and that would soften the carbon emission issue.
how safe is this car? does anybody remember the maruti omni? pretty popular. but flimsy as hell – what the tamilians call a dabba car. i know desis are pretty good at avoiding accidents, but any clues on the safety ratings of this new car? in fact, does anybody know generally about safety standards for cars in india?
I just can’t get excited about cars anymore. Wake me up when they cost the same as this but fly…
You hegemonistic, imperialistic ABD trying to impose western values on India! Do you think we will fall for your trying to mask your superiority by strategic use of the local argot? How dare you!
Hurray for the 1 lakh car !
I can only imagine what Bangalore traffic will look like 2 years from now. When I was working there, I used to ride my bike on footpaths as there was never really space on the roads. I wish the roads kept pace with the developments in technology and transportation… alas, there is a long long way to go before they can match up. With this new cheap car in the market, Bangalore pollution/traffic will reach levels no city has ever seen. I can’t hardly wait.
coach, i feel the same way about pigs.
Pick a city. Ok, Kolkata. The streets in the city are one way. Until 2pm, when they change direction to manage traffic flow. Of course, the number of cars doesn’t dissipate, and the driving doesn’t get any better at that time. In fact, it is the same traffic jam, but heading in the opposite direction. The government has tried such initiatives as banning auto-rickshaws (smaller, easier to maneuver than cars) from the metropolitan area, and also hand-pulled rickshaws (insulting to dignity of the rickshaw-walla). But those omnipresent yellow taxis! Oh, and some new buses, in addition to having a running metro that’s in pretty good shape, it just doesn’t go in enough directions. If you are a pedestrian, you have to risk your life to cross the street. There are unenforced license requirements for drivers, but who bothers? Parking is where you feel like, until a slightly bored policeman tries half-heartedly to get you to move. The taxis and the buses — hell, everyone — stop wherever they please to pick-up and drop off passengers. There are more traffic signals, but they’re still optional. VIPs attempt to burst through with the help of police, sirens, and flashing lights. Self-proclaimed VIPs try with bigger, newer cars. The same result, however, and on occasion, the death of someone walking or living on the sidewalk. And Tata fights on in Singur for their 1 lakh car plant.
Quality of life? Environment? Developing vs. developed? Who cares?
More cars in India are just a bad idea.
Randomizer… Did u ever try riding the bus in Bangalore?
it’s just that mr. ravi kant was more focused on the super-ficial, while linus schmeckel was speaking of premium amenities. safety is not an issue for the average desi consumer, or for that matter, for tata?
What an unfortunate name! I wonder how often he got beaten up in school.
… Quality of life? Environment? Developing vs. developed? Who cares?
What exactly is your point? Just because the government isn’t expanding the infrastructure now, it is ok to ban private enterprise.
“Randomizer… Did u ever try riding the bus in Bangalore?”
Of course … Which is why I bought the bike in the first place !
Honestly, buses in the morning to Whitefield (where i worked ) were jam packed, and the public transport at Whitefiled sucked (at least 3 years ago they did ) … You really didn’t wanna go to office like that, at least I didn’t. There is no doubt that having your own vehicle rocks, be it in India or in the US… which is why I am sure that this 1 lakh car is going to be a massive success, thus clogging the transport infrastructure beyond recognition.
There’s no way to stop the number of cars hitting the roads … the majority of Indians are never going to choose riding a bus over having their own vehicles, especially when owning one becomes so affordable.
especially when owning one becomes so affordable.
The 1 lakh price tab sounds tempting but a cab driver in Kolkata told me that Tata will get you on the parts in the long run. You can only use their stuff and soon the will make back their initial low profit.
There is no doubt that having your own vehicle rocks, be it in India or in the US… which is why I am sure that this 1 lakh car is going to be a massive success, thus clogging the transport infrastructure beyond recognition.
At which point it would faster on a bicycle (maybe with a gas mask)! It worked 14 years ago in Bangalore when the only other option was the public transportation and there was not as much traffic then. It took 20-30 mins on a bicycle for a 8km ride as apposed to 45 mins on the public transportation bus.