Jan 11, 2008 at 02:49pm IST

Small car, big worry: Nano, boon or bane?

As Ratan Tata drove to the ramp what was perhaps the most-hyped four-wheeler of the year, excitement was palpable at the Auto Expo show in New Delhi. Christened Nano, and famously priced at Rs 1 lakh (about $2700), the car was unveiled on Wednesday to a thunderous applause.

Designed for the mass market, the Nano has been hailed as the defining moment of the history of the Indian automobile industry and the one that will make possible a consumer revolution of sorts.

However, it has only a 624 cc petrol engine and can’t run effectively on the highways. Even the famed Rs 1-lakh tag is not really that. The car will cost the consumer close to Rs 1.2 lakh after all taxes have been levied.

CNN-IBN show Face The Nation asked the question: Is Tata’s Rs 1-lakh car more of a marketing hype than real consumer value?

On the panel to try and answer the question were Chairwoman VGC, Preeti Vyas Gianetti, Director CSE, Sunita Narian and editor, Autocar India, Hormazd Sorabjee.

Is Nano truly a people’s car?

Since the Nano is the next big thing and there has been huge media hype over the car, should an automobile be hyped in this way? Should it be given this much glamour given the costs of car in today’s times?

Preeti Vyas Gianetti was of the opinion that if one had such story to tell then the punches shouldn’t be held back. She felt that the Tata Group had made an appropriate display of the kind of product they had come out with.

“The hype matches with the promise made by the product and what is supposed to be serving in terms of consumer needs. The design of it is excellent and I would want to own a car, which looks so smart and sexy,” said Gianetti.

The critique is that the Nano and the new cars are imposing a huge social curb on society. The society is subsidising the car. The society is already paying for the cost so is another car not going to add to the coat of the car owner?

Agreeing that the question asked was a valid one Gianetti however, said that the manufacturer was to be posed with the question or the government was to be asked the same question.

“I think that it goes beyond a car and it is a much larger issue. We are facing that at every level of our interaction in the social world in India today. Since incomes are rising there is clearly a demand on the kinds of products and services each consumer wants for himself or herself,” said Gianetti.

Sunita Narain did acknowledge the fact that consumers couldn’t be stopped, but according to her, one couldn’t have “cheap and dirty motorisation either,”

“The bigger point that we have been raising is the regulatory system and therefore my argument is not really with Mr Tata or with any other car manufacturer. My argument singularly is with the government. I think that the government has completely compromised with the regulations that should govern the car industry and have compromised them to such an extent that today it is creating trouble for the public,” said Narain.


Masses can afford Nano, environment can’t

So did it mean that the car had to be taxed enormously?

Narain refuting the claim to have made such a suggestion only insisted that the car should pay for what it used since the car used road spaces today.

There were many opinions that people had voiced about the Nano, first of all it couldn’t be used in the highway, it only had a 623 cc engine and at the end of the day it could not even coat Rs 1 lakh because it would obviously have VAT and duty taxes so it would cost more than Rs 1 lakh when it would finally roll out.

Hormazd Sorabjee making it clear that he found the debate incredible thought that the question should be asked to the consumer or the potential buyer of the car whether he wanted it or whether he would pay for it.

“We are talking about 60 per cent of the people going by bus, if we ask people on the bus if they could afford to buy a car would they continue to go by bus?” questioned Sorabjee.

“As for the price of the car, it was the commitment made by Tata saying that it was a dealer price,” Sorabjee added.

Sorabjee also perceived it to be the most affordable car and the cheapest car in the country even if there was a fair amount of price added to it.

“The masses are being given mobility which is a very important thing. And we can’t also get away from the fact that people want cars,” said Sorabjee.

Narian didn’t deny that anybody’s aspiration shouldn’t be met but she said that the cost of the car was a very small component of the actual cost of running the car in the streets.

“Along with the cost of the car whether it is Rs 1 lakh or 10 lakh that doesn’t matter to me but the full cost should be paid including the cost of the road, the cost of parking, the cost of congestion because you will lose time every time there is congestion, the cost of emission control and the cost of health. And once if you have paid those costs and society still wants the cars then it has perfect rights to have a traffic jam,” said Narain.

Not shirking away from Narain’s claims, Sorabjee said there were solutions to those.

“In case of congestion, there should be bigger taxes. Cars that consume a lot of fuel should to be taxed and cars that emit a lot more emissions should be taxed. There could be dual taxation in which case the smaller and the cleaner cars paid less taxes. We pay too little for parking but an adequate amount should be paid to park a car,” said Sorabjee.


Sorabjee however, said that the main issue was the road infrastructure, which was so poor that the cars themselves had to face problems.

“We need to be directing our energies for the government to answer why are they not providing us with the decent infrastructure improving road safety and bringing down pollution levels,” suggested Sorabjee.

An eco-friendly car?

Since automobiles imposed a heavy cost on society including pollution, emission, parking space, were this points important to be built into ad campaigns?

Gianetti said that any manufacturer while applying for advertisement for cars needed to understand these factors to make a contribution to the environment.

“Companies that are big advertisers and those that manage to get that message across in fact make some sort of a gesture towards the environment and social causes and those are the companies that eventually get respect,” said Gianetti.

So could a car be advertised as an ecological car and a car that didn’t take up much space?

Gianetti said a car could be advertised on those lines but she wasn’t sure about the Nano.

However she put forth a very interesting point saying, “The tripartite partnership should be sound. The consumer, the manufacturer and the government need to come together as partners and the environment of the country is going to do well if the partnership works well.”

So is the Nano really a car or an auto rickshaw with the engine at the back?

“It is a full sheet metal body car in its construction. The performance is still unknown as it hasn’t been driven. Since the engine is small then it has to give a decent performance, it has to work well with AC and fuel consumption,” said Sorebjee.

Sorabjee wrapped up the discussion by saying that it was the consumer who was going to decide whether the car’s performance came at par with is expectations. “It is a real test for Tata now,” he ended.

Final SMS poll result: Is Tata’s Rs 1 lakh car more of a marketing hype than real consumer value?

Yes- 40 per cent

No- 60 per cent

Editorial View

At the heart of the dilemma about the Nano is how we view consumption. Some say consumption must be limited as it is destroying the planet. But we believe that consumption is the stimulus of economy, consumption fuels growth. The challenge then is to manage growth and manage choice, but not putting an end to growth or to choice. So lets have the Nano, but let it create competition to provide better roads, better mass transport and better traffic management.