Ratan Tata, chairman of the Tata group of companies, has a cerebral and cordial manner. But the "one-lakh car," which Tata Motors unveiled in Delhi to a rapt public on Thursday, is a product of impatience and chutzpah. Instead of waiting for the great swell of prosperity in India and elsewhere to create millions of customers for his company's products, Tata has decided to wade out -- further than anyone has gone before -- to bring a car to them.
In India, "one lakh" means 100,000, and Tata will sell the most basic version of its new car at 100,000 rupees, or $2,500 (not including taxes and the cost of transporting it to the showrooms). This is roughly half the price of its nearest rival, and little more than the cost of a three-wheeled auto-rickshaw. But the "Nano," as the car is called, is no rickshaw. Apart from the fourth wheel and the doors, it has a 623cc engine that will muster 33 brake horsepower. The car should eke out 50 miles to the gallon, Tata says. It complies with the "Euro III" pollution standards that prevail in India and should meet the tougher Euro IV standards with a bit of tweaking.
Tata Motors is best known for its trucks, lovingly decorated and recklessly driven, that clatter along India's highways. It started making small passenger cars only a decade ago. Its low-cost car project has set a trend. Tata says he is "quite gratified" that other firms are following suit. Bajaj Auto, which is known for its two- and three-wheelers, said last week that it hoped to team up with Renault and Nissan to produce its own low-cost car. Fiat, Ford, Honda and Toyota also have cheap models in the works. Tata may discover a market, only for others to crowd into it. "It's not our God-given domain," Tata said.
Cheap cars can be expensive to invent. Tata experimented with a smaller engine but was dissatisfied with its performance. It hoped to use a continuously variable transmission, but had to make do, for now, with manual. Tata's rivals may be able to free-ride on its efforts, copying the cost-cutting tricks it had to discover through painstaking trial and error. "It will be an easier task for them than it was for us," Tata admits.
Competitors will, for example, notice how Tata shrank the car into what its chairman calls a "concise package," with the engine at the back and the wheels at the "extremities." The result is 21 percent more space inside than the Maruti 800, said Ravi Kant, the managing director of Tata Motors, but it is 8 percent shorter. Not that that will make much difference to the traffic jams which the Nano will worsen.
Commuting in India's cities can be both cozy and deadly. Children squeeze snugly between father at the handlebars of a motorcycle, while mother rides side-saddle at the back. This precarious balancing act, said Tata was the "visual target" he had in mind when he first conceived of the need "to create another form of transport."
About 1,800 people die on Delhi's roads each year, perhaps one-third of them on two-wheelers. Only 5 percent die in cars. Tata's project may pose risks for investors, but it promises unaccustomed safety for its customers.