January 15, 2008
The world’s most inexpensive automobile, with a list price of $2,500 (or 100,000 rupees) was launched last Friday at the ninth annual Auto Expo at Pragati Maidan in New Delhi, India. Crowds mobbed the new “one-lakh” Nano car at the auto show. Ratan Tata, 70, the Cornell University-trained architect who heads the Tata Group, an industrial conglomerate including Tata Motors, heralded the Nano city car as a milestone in transportation history, comparing it to the Wright Brothers’ first flight and the first lunar landing.
He cites safety concerns as one of the main reasons for making “the People’s Car” affordable to Indians. One of the primary modes of transportation in India is the motorbike, upon which numerous people often ride together, despite the dangers. The availability of the four-door Nano car, which seats five, will also make shopping and other daily chores easier.
The red-hot Indian economy is growing by about nine percent annually, creating new affluence and a greater demand for durable consumer goods. Company president Ratan Tata, forecasting a million Nano car sales a year, commented: “We should be able to create a new market that does not exist.” The A. T. Kearney international management consulting firm predicts that inexpensive cars priced at less than $3,000 in India might attract as many as 300 million buyers by 2020. The median age in Indian is just under 25 and, with a rapidly growing middle class, India will surpass China in 2009 as the fastest-growing car market in the world, according to estimates from CMS Worldwide, an automotive forecasting service.
The “Peoples’ Car,” which will be made at a Singur plant which is under construction in West Bengal, will produce about 250,000 Nano cars a year. The 33 hp cars will have rear-wheel drive and a 623 cc rear engine, and get 51.7 mpg in city road conditions and 61.1 mpg on the open road.
Tata Motor’s target market is India and its 1.1 billion people, possibly followed by other emerging Third World markets. The no-frills car has no air conditioning, no radio, no power steering, no electric windows, and a small rear wheel drive. Critics say that the car may ultimately cause a world-wide revolution in car prices and that road congestion and traffic in India, already notorious, will worsen, as noise pollution and CO2 emissions increase. Nearly 60 percent of Indian cities have pollution levels already considered critical, according to Anumita Roychowdhury, the associate director for the Center for Science and Environment in New Delhi.
Tata says that a Nano car doesn’t create any more pollution than a motorbike does, but is much safer. While the cars will comply with Indian safety standards, those standards don’t include airbags, anti-lock brakes or full-body crash testing. Critics fear that India’s high accident and mortality rate will increase, with drivers and passengers in small, inexpensive cars such as the Nano sustaining the most injuries.
Meanwhile, Rajendra Pachauri, an Indian environmentalist who chairs the Intergovernmental Panel on Climate Change, said he was “having nightmares” over the prospects of mass motorization due to the low price of the Nano car and increasing climate change such as more pollution and more global warming. He said the Nano illustrates the bankruptcy of Indian environmental policies. Supporters counter by saying that the Nano has lower emissions than other automobiles and argue that industrialized countries should have to reduce car usage and emissions, while not denying Third World countries the increased mobility and options that car ownership can bring.
Even manufacturing the car has become controversial. The West Bengal government gave 997 acres to Tata Motors for plant development in the most fertile are of Singur, which will result in the eviction of an estimated 15,000 farmers. The farmers fear that they’ll receive little to no compensation, while losing their livelihoods due to displacement.
Other protestors from the New Delhi Solidarity Group (NDSG) protested at the auto show against the “forcible” Singur land acquisition. One member of the group, identified only as Rakhi, said: “We are not against industrialization, but why should the poor always sacrifice their lives and livelihood for the dreams of the middle class? The Singur farmers say their lands yielded multiple crops and no compensation can match the loss.” The NDSG claims that much of the land at the Tata construction site was seized from farmers by military forces of the West Bengal government, and they want construction halted until all issues are resolved. Later in the day at a press conference, six Singur farmers claimed they had refused the compensation offered for their land, while “Rakhi” said many other farmers have refused to cash their compensation checks and want to return them. Tata’s claim that it would hire local people to work at the plant was also questioned, as only 12 Singurians have thus far been hired, as security guards.
Environmental activists burned a Nano car in effigy near the Kolkata location of Tata’s manufacturing unit. According to The Times of India, New Delhi women protested at the Nano’s Auto Expo debut, wearing T-shirts bearing red slogans that said: “The Rs 1 lakh car has Singur people’s blood on it.” The Trinamool Congress Party (the Grassroots Congress Party) has threatened to stall the car’s manufacture, claiming that Tata Motors seized farmland for its construction site. While India has public domain laws, there are no provisions for the taking of land for private business purposes; even the Kolkata High Court has acknowledged the land acquisition’s illegality.
In related automotive news, Tata is also expected to win a $2 billion bid for two iconographic British luxury brands, Land Rover and Jaguar (now owned by Ford Motors).
Read more economic news about India.
Photo credits: Strdel/AFP/Getty Images
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