Nano brings pride, but profit?

Monday was the debut of the long awaited Tata Nano, India’s answer to the Model T. Initial reviews are favorable, with reviewers impressed by how normal a car the Nano seems to be, given its small size, engine and cost (via anatha):

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Even the green crowd seems accepting of the new vehicle. While Greenpeace protestors picketed the announcement of the car, Ratan Tata claims that the Nano is less poluting than many two wheel vehicles on the market and even UN Framework Convention on Climate Change executive secretary Yvo de Boer said,

“I am not concerned about it (the Tata Nano) because people in India have the same aspirational rights to own cars as people elsewhere in the world.” [link]

In addition, the Nano already gets 70mpg, and there are discussions of an electric model in the future.

So it’s a lot of car for the money and it’s green. What I don’t understand is the business side of the equation. Can Tata make money on this car? And if not, will the Nano and Tata motors survive?

As typical with new models, Tata is taking a loss on each Nano it ships. Tata has admitted that it will only be profitable in the long run, once efficiencies of scale kick in to drive the cost per unit downwards. However, while Tata aspires to produce a million cars per year, right now they can only make 50,000.

Once the new factory in Gujarat opens up, they hope to make 250,000 cars per year, but even then it’s expected to only add 3% to revenues. It’s going to take more than six years for Tata to break even on this car at that rate, and I suspect that’s an optimistic projection.

Meanwhile, Tata is in a weak financial position. On Tuesday, S&P lowered Tata’s ratings from B+ to BB- and indicated that further downward revisions were in the offing. This pushes Tata’s bond ratings further into junk territory just as it is struggling to refinance $2 Billion of the $3 Billion bridge loan it took to finance the acquisition of Jaguar and Range Rover.

I can think of two ways the Nano will have a positive effect for Tata:

The Nano is providing a cash infusion in the form of deposits for new cars:

Right now, you have to pay for the car up front, even though supply is limited. There will be a lottery to determine the first 100,000 customers, so many customers will have paid down a deposit without getting a vehicle in return. If you don’t get a car right away, you can get your money back or you can leave it with Tata who will pay you 8.5% interest on the deposit. All of this brings in a massive amount of cash

Despite its constrained production run, the company has set no limit to the number of people who can apply…Suppose the initial allotment of cars is subscribed twice over: Tata Motors will get an immediate cash infusion of more than 20 billion rupees. If it can sustain the hype and expectations, it won’t have to return this booking money to the surplus customers. It will, in effect, have secured for itself a cheapish source of deposits, redeemable for a car, as production allows. [link]

This is clever, but at even with such an optimistic scenario, it brings in only a half a billion dollars when their debts are much larger than that.

The Nano is a massive branding and publicity exercise:

the Nano project as a whole makes more commercial sense than the basic car considered by itself. If nothing else, it has been a phenomenal branding exercise. As Ravi Kant, managing director of Tata Motors, put it yesterday, the Nano has become a “happening product”, attracting 30m hits to its website and inspiring online communities at Orkut and Facebook. The company hopes to make money from merchandising, selling every frippery you need to pimp your Nano, as well as T-shirts, bags, key-rings–even a Nano teddy bear. [link]

The publicity from the Nano is huge, but there are limits to the amount of money they can make on Nano Schwag. And while they are getting a reputation as an innovative company that makes good cheap cars, I’d think this will hurt them with Jaguar and Land Rover buyers who don’t want either association with their pricey old-school vehicles. I really think they might burn themselves in terms of marketing – I don’t think they can be known for Nano and still try to sell to the luxury market.

Honestly, I’m baffled. Any thoughts? What am I missing?

68 thoughts on “Nano brings pride, but profit?

  1. TATA went from a B+ to a BB-?

    NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!!!

  2. I don’t think we should be so blase about the environmental consequences of exapnded car ownership. Of course I think Indians have an aspirational right that should be respected to own a car; but the blunt fact is that the urban infrastructure can’t really support much more traffic and if our megapolis’ are going to be viable centres for the bulk of the national population (which is the current trend) then there needs to be a move towards integrated public transport systems and mass transit solutions. Otherwise we will end like Bangkok.

    Tata may lose money in the short run on the Nano; but I think they will be able to make it profitable outside that. The timing was disastrous but otherwise there will be a demand for it.

  3. I also imagine it will be sold for ~$3-4k in the overseas market. They’ll certainly make money there.

    And I disagree with it hurting the Jaguar brand. Corollas don’t hurt Lexus. It’s the whole point of having two brand identities.

  4. The Indica was supposed to be what the Nano is. I’m pretty sure Tata will be profitable here, and in any case, the thing to remember is that Tata is a conglomerate of companies. Its not GM. Its like GM+GE+IBM combined. If Tatas promote the car like “hamara bajaj” was promoted, they’ll surely profit.

    And I’m one who would like to see young families in safe cars instead of the circus they manage on two wheelers. My dad had a scooter (a Lamby/Lambretta), and I remember our family of four, traveling on that scooter on Indian roads.

  5. TATA went from a B+ to a BB-?

    Wasnt ENRON rated AAA right before it went to zero !!! The rating agencies have become a joke. It would have been funny if it had not been criminal. Rating agencies are partly to blame for all the financial ills that the US is facing.

  6. @RC #6:

    TATA has some serious debt issues. They have $2 billion of their bridge loan coming due in June, and major debt from their own operations.

    @Barwa #3:

    The main impact is likely on congestion, which creates pollution indirectly. That said, their production will ramp up slowly. Another 50K to 1 lakh cars throughout all of India in the next year (and I’m sure they’ll make sure the raffle distributes them) wont impact things too much. It’s once you get beyond that point …

  7. S&P should be a laughing stock (irrespective of whether they are right about TATA or not); I’m surprised that people take it seriously given its ratings performance in the past 3 years or so (arguably you could go further back). I would trust a good desi or asian rating agency over S&P any day. A friend of mine who worked at s&p for a couple of years noted how clueless they were about Indian market conditions and corporate structure and expectations.

  8. You might be right, but it will make it harder for Tata to raise cash since S&P’s ratings are still taken seriously. Furthermore, in the articles I read from the Indian economic press, none of them contested the ratings. If that’s the case, then investors will respond to the same underlying factors which are driving the ratings, even if they disregard S&P itself.

  9. I agree, at least in the short term investors are not going to be happy. I would, however hold on to their stock, especially considering the alternatives. I expect Tata to make that argument soon.

  10. People shouldnt forget Nano has been launched at this time to support Modi. Same guy responsible for killing of around 2000 muslims in Gujrat few years back. General elections are just a month away in India and this will help Mr Modi in Gujrat. Modi offered free land in Gujrat to TATA to get the Nano factory moved there last year. Considering this car is coming from india which hardly has any expertise i dont think it will succeed.

  11. 11 · BailGaadi said

    People shouldnt forget Nano has been launched at this time to support Modi.

    Yea, right. And Mamata Banerjee was complaining that they launched it now to piss her off (since Tata had to give up their new factory in West Bengal. Stupid politicians think the world revolves around them.

    Considering this car is coming from india which hardly has any expertise i dont think it will succeed.

    LOLed. No expertise? you FAIL at knowledge.

  12. 7 · Ennis said

    The main impact is likely on congestion, which creates pollution indirectly. That said, their production will ramp up slowly. Another 50K to 1 lakh cars throughout all of India in the next year (and I’m sure they’ll make sure the raffle distributes them) wont impact things too much. It’s once you get beyond that point …

    That is what they are expecting now; initially, if I remember correctly they were expecting sales of 2 lakhs in the first year and for growth off that. I am not sure the creaking infrastructure can cope with this given the population densities.

    There is also a hidden economic cost on the exchequer given how petrol is subsidised – obviously not so much at current oil prices, but this potentially a problem when prices pick up again.

    In anycase, I just don’t think mass car ownership is the way forward for us under current conditions.

  13. I wonder how the Nano will do in the overseas market in comparison to the Smart car . . . . . .

  14. a billion people with tata nanos = detrimental environmental consequences, greater risk traffic safety, increased traffic congestion, parking nightmares….hopefully the air compressed cars when they come out will be safer on the environment, hopefully….

  15. 14 · Zinc plate said

    Finally a car big enough to compensate for their small appendages.

    Well said….they look like death traps to me..about a grade above an autorickshaw…beep beep!!

  16. Oh my will somebody please think of the environment!

    I reckon that 99% of the individuals commenting on Sepia Mutiny have a higher ecological footprint than the entire family of an average Nano owner.

    Think Global, Act Local folks!

  17. I’m not sure what the breakdown of sales is going to be, but I’d argue there’s a large, grossly underserved market in the lower-middle –> middle class in second-tier cities and rural/semi-rural areas where this car could prove both useful, and safer than existing modes of transportation. Also, keep in mind that in very crowded city environs, parking becomes a big issue. A family that could not afford existing cars will likely have issues obtaining satisfactory parking within their budgetary means — so this is a potential limitation on how popular it could be with the lower-middle class of existing first-tier cities.

  18. 19 · MnA said

    I reckon that 99% of the individuals commenting on Sepia Mutiny have a higher ecological footprint than the entire family of an average Nano owner.

    :) This is so true.

  19. Ennis: Maruti Suzuki is coming out with “Cervo” costing 1.5 lakh, to compete with Nano. It has more bells and whistles and bigger engine, and only 25,000 rupees more than “Delivered” Nano which is costing folks 1.25 Lakh. Them japs are at it again !! Start buttering your in-laws for that extra 50,000 Rs. and if they ask for a ride show them the Trunk ( or DICKY ) – as they call in India.

  20. Few points I would like to make. First, as one commenter mentioned already, they want to sell this in several Asian and European countries where they can make some profit. Second, I have read somewhere that they are filing several patents based on the Nano. Once the economy recovers and we get back to $150 a barrel of oil, expertise on small cars will get Tata something in terms of someone buying their knowledge/collaborating with them. As far as Jaguar and Land Rover goes, I think Nano actually helped Tata with respect to those brands. Now they are not just perceived as a third world car company which bought established brands and are clueless on how to handle them. Rather, they are seen as an innovative car company which can bring innovation similar to that needed for Nano, to Jaguar and Land Rover.

  21. this will hurt them with Jaguar and Land Rover buyers who don’t want either association with their pricey old-school vehicles.

    Land Rover and Jaguar already have shite reputations. I don’t know their current standings but they used to be regulars on the worst high-end cars list. If Nano survives the Indian roads, it may actually help those pricey lemons.

  22. i agree it’s largely a marketing stunt gone awry, though it does appreciate the potential demand level that’s out there. I have my environmental qualms and I hate car culture and I would rather see good buses and public transportation when India is at a stage that it can actually DO that and doesn’t need to create a massive desire among several hundred million people to aspire to own environmentally destructive technology. but if I see another family of five on a motorcycle, I’ll go crazy. So mainly I don’t like it. Also, you should note that Indian environmentalists like CSE also drew attention to the environmental problems, not just international or Western NGOS – which I think might be significant, though I’m not sure.

    Anyway, good post (as usual) – the only thing I would add is that this also helps Tata consolidate its position in the car market potentially – I think some of the other low cost cars (which were already only slightly above one lakh) were already reduced in price – presumably, this will at minimum cut into the profit margin, if such a thing exists for those cars. So this helps Tata undercut the competition in what, in the long run, WILL be a huge market – and presumably they have enough resources from other places in their business family – tea, hotels, outsourcing, jaguar, etc. – to make up for it? Or their whole business model sucks and you’re right which is very possible :)

    And also, Tata has a long history of branding itself (perhaps backed by a little substance) as a nationalist company – so it serves a political purpose as well for the broader indian elite in bolstering the Indian Dream analog of the American Dream, not just for Tata. Of course, manufacturing it in Gujarat is heinous and in other places is heinous.

  23. Nano will evolve over time, and it’s price will inevitably rise over several years. However it’s potential market (true for other similar products) is immense. Several hundred upcoming tier 2-3 cities, and an ever increasing percentage of lower middle/middle class consumers who want convenient personal transport. It will take a few years, but I’m sure it will make long term profits. Undoubtedly, there is merit in questions about traffic congestion and concerns about the environmental impact of increasing number of petroleum driven cars. Good public transport and cheaper, greener cars are not mutually exclusive. Of course we need better infrastructure. Of course we should control our emissions. But this, coming from countries with a culture of one gas guzzling car per citizen smells of hypocrisy and double standards. I think we should seriously spend our time and money on exploring cleaner energy sources instead. Why is that not moving forward? And what is so heinous about Nano being manufactured in Gujarat? There are plenty of other industries based there. It makes good business sense.

  24. The publicity from the Nano is huge, but there are limits to the amount of money they can make on Nano Schwag. And while they are getting a reputation as an innovative company that makes good cheap cars, I’d think this will hurt them with Jaguar and Land Rover buyers who don’t want either association with their pricey old-school vehicles. I really think they might burn themselves in terms of marketing – I don’t think they can be known for Nano and still try to sell to the luxury market.

    the branding effectively mitigates against that. bmw went downmarket with mini and daimler with smart, neither hurting thier more prestigious brands. now car companies have long been willing to lose money on cars, but they usually do it in the opposite end of the market. the 1M+ bugatti veyron losses money as did the ford gt and the 500K or so mercedes slr. but they built up the brand (halo effect) and got people into the showroom to see the supercar, where they went ahead and puchased somethng else.

    porsche has long believed this strategy idiotic and insists on making money on every car. i believe they’re the most profitable car company in the world on a per car basis. they argue what’s really going on here is the engineers have taken control of the company and are doing things based on passion rather than business sense. it happens more than one may think (think rupert murdoch buying the wsj for an ungodly price).

    so tata apparently doing this in the low end is really unusual. perhaps they want to appear populist, a sort of halo effect for the developing world…something a supercar can’t do. maybe they want to create a market like a drug dealer does, then jack up the price. or maybe they’re really thinking for the long term.

  25. “But this, coming from countries with a culture of one gas guzzling car per citizen smells of hypocrisy and double standards.”

    i think environmental concerns are really valid, especially in india, and this is a great opportunity for india to leapfrog some of the mistakes of the western lifestyle and not blindly ape everything. however, i have to agree with you about the hypocrisy. read many of the comments on the bbc’s “have your say” on this topic and you will laugh at the number of first world residents who think poor third worlders — who right now consume/pollute far less per capita than the average westerner — should “save the planet” whilst not mentioning whether they themselves drive a car (bet you they do) or are willing to forego one/reduce their own standard of living so that poor third worlders can finally have a go at their lifestyle.

    to be fair, there are also many sensible comments with constructive criticism of the nano and its possible effects.

    apparently america’s own road system/public transportation system only markedly improved with the advent of mass-produced cars, so maybe increased car ownership in india will have the same effect.

  26. The mpg is closer to 50 (article is wrong). Tata plans to sell a nano kit for third parties to assemble and sell. This is not just a car but a new industry.

  27. Good public transport and cheaper, greener cars are not mutually exclusive. Of course we need better infrastructure. Of course we should control our emissions. But this, coming from countries with a culture of one gas guzzling car per citizen smells of hypocrisy and double standards.

    That’s why I was careful to point out that Indian environmentalists have objected. It is not an either/or – the U.S. should take the opportunity of the near bankruptcy of the big three auto companies and the need for public investment to fundamentally transform the way the transportation works in the United States rather than pretending the model it created should be sustained or replicated in other places. But your point is well taken that frequently criticisms of occurrances outside the United States/Europe etc. on environmental, human rights, and other grounds are frequently rooted in either naivete about the rest of the world or at worst are manipulative tactics that exploit power imbalances. That, however, doesn’t preclude acknowledging that the issues they are exploiting actually ARE issues and can have attention raised to them in ways that aren’t imperialist or hypocritical.

  28. “BBC’s ‘Have Your Say’ segment is pretty notorious for being overrun by the Daily Mail reading segment of the population. This hilarious site pokes fun at the more delusional, weird and racist comments posted there: http://ifyoulikeitsomuchwhydontyougolivethere.com/

    thanks for that link:)

    anytime there is a “have your say” on india on the bbc, and especially if it is on some modest indian accomplishment/aspiration rather than on a disaster/tragedy/atrocity, i know i can look forward to umpteen variations of the following: “why are they wasting british aid on developing —— (fill in the blank – nano, space programme, abishek/aishwarya wedding, the ipl). because all these are products of british aid, apparently.

  29. People are stupid. I’ve seen pretty dumb comments on Indian newssites and over here as well as the BBC and the Guardian, though the latter type are reflective of a more insidious type of racism.

  30. “I’ve seen pretty dumb comments on Indian newssites..

    oh, i’m not claiming that indian media is immune to it. was just pointing out the reaction to the nano.

  31. I know you weren’t :-) I just think that a lot of people who comment on news sites are as dumb as rocks (or pulling a leg).

  32. 32 · Whose God is it anyways? said

    because all these are products of british aid, apparently.

    well, if one understands how cash flow works, expect for the private weddings, all these things are partially due to aid. like when citi wanted to buy a new plane and the us govt objected they retorted it wasn’t the govt money they were using, but money they got somewhere else. but money in a company is like water in a pond, it can’t be separated really.

    but i guess we can just re-brand the aid as reparations and that should solve the problem.

  33. a couple of random facts and thoughts.

    jaguar’s ratings shot up this year. whatever majic joos tata injected seems to have worked. [rumor has it that it may be that the measurement system was adjoosted this year].

    i vont worry about the environment. self-adjusting systems are tres resilient. i remember a time when i couldnt breathe in delhi aruond connaught circus. now i can make it through a week with only a persistent coff to showe for the effort.

    reports say that auto sales suck because the alternate credit offering institutions have tightened the screws on loans. the nano is geared to a market where credit is NOT cheap, which seems to be the general trend. Once the consumer wakes to the cheapest alternatives like the nano – and is willing to do without features like ‘your door is ajar’ – there will be a market for such vehicles in the west – though the price will likely be between 5 and 7k by my estimate.

    obama and co are injecting several billion in the economy through TALF’s to essentially bolster the credit happy habits of the american consumer. basically a trillion dollar credit providing structure that was larger than the banking sector collapsed under the vait of the dead loans. the mandarins say cheep credit is good for the economy. gordon brown… someone who actually headed finance at one point… vehmently disagrees with the above perspective btw and i agree that cheep credit is not the vay to go. i would like the TALF program to die as well, and you will see this come up at the G20 summit next veek.

  34. “but money in a company is like water in a pond, it can’t be separated really.

    • i know :) but then british aid is not really “british” nor is it “aid” then, since it can’t be separated from the profits (or unwilling “aid”) they made in india/caribbean/africa etc. that all went into one giant pool of wealth.

    “but i guess we can just re-brand the aid as reparations and that should solve the problem.”

    • not reparations, maybe mortgage repayments on a couple of castles :)

    it’s a silly game, that’s all.

  35. nano is a major transformational technology – basically it has redefined what it means to create a small car for developing markets. My guess is that Tata could sell ten million of these every year for the next 20 years. And this is before we talk about the broader asian and african markets. By understanding and working with the needs of the aspirational indian middle and lower-middle classes, ratan tata has created a real change in low-cost transportation.

    Now we have the usual nonsense about india has no roads and so on. Thats true today, but guess what, once there are 100s of these cars even in small towns, people will be forced to create roads. It no longer becomes a luxury issue or something for the lazy state govt to figure out. It becomes much more of a mass issue and thats part of the genius of this move.

    As for the enviro-lovers on this list..what a joke!…as someone already commented, the average american has the carbon footprint of maybe ten indian families each with 2 nanos. In any case, poor countries are going use old-fashioned methods of getting ahead…sounds fair to me….the real tragedy is that richer countries havent invested and created more efficient technologies.

  36. The Tata Nano will fail as a commercial venture because the idea behind it fails to fully grasp why people buy cars and in particular why they but the cars they do. The most critical point of selling a car or really any high priced commodity is selling cachet, value is secondary. Purchasing a car is a status symbol and representative of both your present socio-economic status as well as your future aspirations. The process of purchasing a car is designed for most consumers to be a statement of identity as to what you wish others perceive you to be. The Tata Nano is being marketed as a budget People’s cars and that is not enough to drive consumers. They could be marketing the car as environmentally friendly, or possessing urban chic, or even distinctively Indian and thus patriotic, but as they say the message is not coming through. What the Tata Nano screams is that it is only 2500 USD and this overrides all other messages. The purchasing value of novelty is only temporary and for a car to survive, it has to offer more than just value.

  37. The most critical point of selling a car or really any high priced commodity is selling cachet, value is secondary. Purchasing a car is a status symbol and representative of both your present socio-economic status as well as your future aspirations…..They could be marketing the car as environmentally friendly, or possessing urban chic

    I think your analysis is off the mark. The consumer group that the Nano seeks to target wouldn’t care about urban chic if it walked down the street with a Prada fringe bag and a pink neon sign. Possessing a car itself is both a status symbol and an significant improvement in the quality of life for them.

    The process of purchasing a car is designed for most consumers to be a statement of identity as to what you wish others perceive you to be.

    This might be true in the developed world. When you have to choose between braving the monsoons/extreme summer/bitter winter, balancing a family on a two wheeler, or having the shelter of a car (however basic), theses considerations are completely irrelevant.

  38. what can Nano do for Tata? In additions to the foreign sales and other angles that have been mentioned here -

    1. First and foremost, it revitalizes Tata as a company. All of a sudden, talent wants to go there over other competitors. As the labor market tightens, this is a non trivial matter. This might not have been the cause to create Nano, but is the effect for sure.

    2. It provides economies of scale. Of every kind imaginable.

      2a. Within the holding company, it must have shaken things up in R&D, and they will definitely leverage learnings from this in their other business as cost savers. Other cars, trucks etc of theirs will use various parts from the “Nano lab”

      2b. Raw material – Gives them even more grip over their suppliers, and helps the whole Tata group get purchasing synergies. Longer term vertical integration between Corus-

      2c. Dont know where you will put this, but you also get synergy of government blessing. Nano was a regular conversation point in Gujarat recently, and the bigger they get, the more employment they provide, the more are all their businesses going to benefit over a longer term

    To summarize, IMHO, it would be more appropriate to see Tata pre/post Nano. The P&L of Nano might be a flatter J curve for the time being, but its ripples will be felt on many of their businesses, and that wont be captured in their income statement.

  39. As for the enviro-lovers on this list..what a joke!…as someone already commented, the average american has the carbon footprint of maybe ten indian families each with 2 nanos.

    So in other words because because the average American has gone a fair bit down the road of destroying the environment; the clear solution must be that we much encourage the few hundred million more average Indians to join them on this road. PMSL!

  40. I’m really torn. On the one hand I’m always a passionate defender of enviromental concerns. (I don’t own a car, so don’t even bring that up.) One the other hand, the carbon footprint of the average European is much bigger than even the targeted lower middle-class Indian of this car, with or without the Nano. On the other hand, do we really want to clog the streets of India with even more cars? It seems to me that roads need to be repaired and traffic regulations to be reinstated before India’s lower middle class can take en mass to the roads.

  41. Lupus, thanks for that link. interesting range of comments.

    “So in other words because because the average American has gone a fair bit down the road of destroying the environment; the clear solution must be that we much encourage the few hundred million more average Indians to join them on this road. PMSL!”

    no, there is no “clear solution.” should people like this indian man: http://news.bbc.co.uk/2/hi/business/7954979.stm wait for things to be perfect or for “clear solutions” before he should be allowed to provide his family with what others have? he’ll be waiting forever. ideally, tata/other auto companies and the govt. should work together and indian environmentalists have very valid concerns about the nano’s possible success. it’s not that indians should go down the same path as americans, it’s the sense of entitlement in some of the comments from the west — where the govt. actually allows hummers to be produced and driven, even with high gas prices — that rankles. a country where a teenager learning to drive and getting either access to the car or their own car is seen as some sort of birthright and rite of passage. why should the legal driving age be so low in most countries, including in india?

    it seems that the nano will at least be less polluting than the two-wheelers so why aren’t there more complaints from the west when an indian family buys a cheaper motorcycle and drives it around with the family perched precariously on it? as someone said, if this car had been produced in the west and met all the emission standards and was an improvement in mpg/pollution and was economically priced, it would be welcomed and no one would worry about every american family running out to buy one as an extra car for the family — for their teen who needs a car in high school for some reason – probably in addition to the two cars they already have.

    as one indian auto analyst pointed out, in india a car meant for 5 will probably seat double, and the families that are likely to buy the nano are probably fairly frugal in their lifestyles anyways.

  42. Conrad Barwa et al regarding environmental concerns: The Nano is far more environmentally friendly than most of the vehicles used today in India The volumes are small – the ten million cars /per number in one of the posts is not realistic. – Around a million cars are sold in India each year – Nano will sell at most a few hundred thousand for the next few years

    Public Transportation is not a replacement for the Nano – in India it is extensive, but slow, polluting and bad. Travelled by state corporation buses in India If time is a concern, and in a global economy it is, this restiction adversely impacts the Indian economy – The quality of life one gets is poor. Here are some things a train commuter at India’s best connected city has to look forward to: Travelling for upto hours on end for merely 10-40 miles. (After all is’nt New bBombay just 15 miles from the heart of the city Zip code 400001?) Travelling on a train so full that your feet are barely inside and you are clinging the doorway with your fingertips? Not being able to get off at your stop because the train is too crowded / jumping off on the wrong side of the tracks. Having your life dictated to by the clock, and having it disrupted because the rain is late
    – Public Transportation is inadequate to meet current demands, let alone future ones. – projects take a long time to completion. Konkan Railway planning started in 1985, the project completed in 1998. Konkan Railway is a success story, and had excellent project management. What should the average commuter do until then? Public Transportaion has a lot to cope with.

    The Nano will not affect Public Transportation- the numbers are too small, & there are too many bottlenecks for the Nano to make a difference

    Finally, the Nano will save lives. ABDs do not realize how many people die because of the vehicle used. Most DBDs know someone who died in a 2 wheeler. Many have also seen such accidents. But yes, the Nano will have a much larger environmental impact than a fuel-efficient 2 wheeler. both on the road and if you consider how much pollution was avioded by getting people off the road and the world.

    The bottom lineis this — the key to making transportation more eco fiendly in India remains good city planning, so that people do not have to travel miles to work. Developing alternatives to mega -cities. Building up infrastucture, so that busineses are distributed across the country. Better roads, so that there are no pollution causing jams. Better policies, so that traffic can move more efficiently. And yes… much, much, more investment in Public Transportation and looking to new technologies.

    It could make sense to blame the Maruti (government money, distraction of priorities) for some of these woes. But It makes no sense that the privately developed, fuel-efficient nano is getting so much flak.

  43. it seems that the nano will at least be less polluting than the two-wheelers so why aren’t there more complaints from the west when an indian family buys a cheaper motorcycle and drives it around with the family perched precariously on it? as someone said, if this car had been produced in the west and met all the emission standards and was an improvement in mpg/pollution and was economically priced, it would be welcomed and no one would worry about every american family running out to buy one as an extra car for the family — for their teen who needs a car in high school for some reason – probably in addition to the two cars they already have.

    I think there are a number of assumptions built into the thinking here; certainly if the nano is really less polluting than a 2-wheeler then a case can be made that it is less polluting – I haven’t seen any hard statistics or claims that it is. The cruel truth of the matter is that along with things like fridges and microwaves etc. Which most Western consumers enjoy the numbers are relatively small compared to what Indians and Chinese consumers who now have the purchasing power want to enjoy. I remember my economics teacher in school saying this years ago; that hundreds of millions of consumers in China would like to enjoy these things and have a right to do so and the environmental thinking has not adapted to solve this dilemma – since one can’t ask consumers in emerging markets to effectively forgo consumption of durables that consumers in OECD countries have been enjoying for decades. For obvious reasons this is a non-starter. I agree with this. However, I absolutely reject the approach embodied in the quote that I parodied, that means we must ape Western consumption patterns uncritically. There are two components to this; firstly there needs to be equity in the reduction of the ecological footprints across countries; which means that richer countries must do more to reduce their footprints. Secondly, however, this slack should not be met by poorer countries ratcheting up their eco-footprints by mimicking rich country consumption paths but by looking for solutions that are sustainable and viable and also for a greater mass transfer of clean technologies from rich countries to poor countries at no or little cost. These are the two broad directions we should go down imo.

    Also lets not pretend this is some sort of empowerment issue for the lower middle classes or the poor. Almost all serious studies of CC and environmental degradation agree that it is these classes that will bear the brunt of ecological deterioration – the elite and better off middle classes will be able to insulate themselves from such trends the lower middle classes and the poor will not. I am not going to advocate supporting anything that is basically going to encourage these classes to commit a form of environmental suicide in the long-run. as one indian auto analyst pointed out, in india a car meant for 5 will probably seat double

    Yeah, and how safe is this exactly?

    The Nano will not affect Public Transportation- the numbers are too small, & there are too many bottlenecks for the Nano to make a difference

    See ref my first comment to replies on this. Finally, the Nano will save lives. ABDs do not realize how many people die because of the vehicle used. Most DBDs know someone who died in a 2 wheeler. Many have also seen such accidents. But yes, the Nano will have a much larger environmental impact than a fuel-efficient 2 wheeler. both on the road and if you consider how much pollution was avioded by getting people off the road and the world.

    Yeah, ok, first of all I was born and grew up in India, secondly I don’t use terms like ABD etc or desi because generally only the American NRI community do this. Thirdly, I will go one better than you, I have rarely seen accidents with two-wheelers but I have seen several fatal accidents involving lorries/trucks and Public Transport Buses – the latter particularly are a hazard for passengers and pedestrians with fatalities occurring on a regular weekly basis in cities like Delhi. The issue isn’t the mode of transport (although this has an impact) but traffic discipline and driving regulations. I don’t drive nor do I allow my elderly parents to drive simply because it is nearly suicidal one way or another; even if you get involved in minor traffic accident, the incident can get blown out of proportion with the other driver becoming violent, abusive etc. But this is a separate matter. However, imo, introduction of the nano will not solve these concerns.

    The bottom lineis this — the key to making transportation more eco fiendly in India remains good city planning, so that people do not have to travel miles to work. Developing alternatives to mega -cities. Building up infrastucture, so that busineses are distributed across the country. Better roads, so that there are no pollution causing jams. Better policies, so that traffic can move more efficiently. And yes… much, much, more investment in Public Transportation and looking to new technologies. You have hit the nail on the head here. I also think, like European cities and places like Singapore – which resemble the space constraints our cities face much more closely than the sprawling American urban centres; solutions like congestion charging, pedestrianised zones and other traffic limiting procedures will need to be brought in at some stage.

    It could make sense to blame the Maruti (government money, distraction of priorities) for some of these woes. But It makes no sense that the privately developed, fuel-efficient nano is getting so much flak.

    I think we need to calm down here. Nobody is blaming the nano for anything yet; some people are just pointing out valid concerns about the mass spread of car ownership. I don’t think anybody is talking about depriving people of their rights to enjoy safe and secure transportation. We need to move away from the instinctive reaction, that for some reason seems to dominate so much of urban thinking in our country, that more uncontrolled consumption is instantly a good thing and not to be denied without some reflection. Secondly there is no such thing as free lunch; there are always externalities and social/other costs that need to be considered – just because these are not measured in the short-term at the personal or family level, does not mean that they should be ignored. One of the weakness of our society has been that such costs are slow to be recognised and integrated when considering the broader impacts of large-scale changes. I read the environmental concerns etc in this light. We may well arrive at an agreement or solution that means mass car-ownership can be reconciled with these concerns or there may be a conclusion that an alternative is more desirable. Whatever the outcome, I think all parts of the problem need to be looked at from a broader and long-term perspective.

  44. I should not have overgeneralized. And the infamous redline /deadline busses are a huge problem. But the danger posed by two – wheelers Safety should not be minimized. Bus/ Car fatalities are insignificant compared to bicycle/two-wheelers riders

    Here’s an article from PTI on in http://in.rediff.com/news/2004/jan/03road.htm?zcc=ar Over 85,000 road fatalities are reported in Indian every year, making it the most dangerous nation to drive in, according to statistics released by the Loss Prevention Association of India.

    According to LPA, a two-wheeler rider is five times more prone to accident as compared to a person in a four-wheeler.

    Also, here’s a study, The Road Ahead The Road Ahead Traffic Injuries and Fatalities in India, from IIT -D has a more indepth look at Traffic Fatalities.

    Switching over to the Nano will certainly save lives.

    I also get your point that the larger debate is whether India should go in the car-centric US fashion or follow the Singapore /Europe model focussing on public transport & agree that the US model will be ecologically disastrous

  45. The Tata Nano will fail as a commercial venture because the idea behind it fails to fully grasp why people buy cars and in particular why they but the cars they do

    koschei – have you lived and worked in India. your statements are very true vis a vis the western world but quite untrue about India. Cars and houses are aspirational and every desi family will buy a car if it can afford it.