Small is big, at least in the passenger car business. Tata Motors, the flagship firm of the Tata group, is gunning for the booming ‘small car’ segment in India. Work is underway to develop a very low-priced, entry-level car. “The Rs 1-lakh car is under development,” confirms Ratan Tata, Chairman, Tata Sons.
Pointing out that automotive products were still far too expensive for most of the population, Ratan Tata states that the challenge was to bring down the cost of the vehicle and make them more affordable. “We want to break new ground in the small-car segment, priced between a two-wheeler and a low-end car. With this car, we are targeting the young, growing families with a price that is within their reach. There is tremendous potential for such a product. Approximately 5 million people are driving two-wheelers today because they cannot afford even a low-end car; with the launch of this product, we hope to provide a bridge between the two wheeler and the passenger car market,” Ratan Tata tells exchange4media.
How is Tata Motors positioning the car? “It’s a ‘real people’s car’. Right now, it’s in the conceptualization stages but we will be using new technology and new materials. There will be no frills attached – it will be a simple vehicle. But we will provide the opportunity to upgrade to one with accruements. It’s all in the planning stages; we are beginning with a clean sheet of paper. But I can confidently say that it will not be an upgraded two-wheeler nor will it be a car stripped down,” states Ratan Tata. The car should hit the roads with the next Auto Expo.
The feasibility of the project was reflected in Prime Minister L K Advani’s speech at the inauguration of the 7th Auto Expo, “If only we had a people's car costing no more than Rs 1 lakh, millions of people would be queuing up to buy it.” The lowest-priced cars in India cost around Rs. 2,50,000, a sum affordable to mostly middle class urban families. Advani stressed on the need for cost-effective vehicles, which fulfill the aspiration of a larger chunk of the population.
In retrospection, India is now being regarded as a manufacturing hub for mini cars. The B segment seems to be a fast mover, both in the domestic and export markets. The latest SIAM (Society of Indian Automobile Manufacturers) survey reveals that for the period April to November ‘03, total passenger car exports touched 72,535 units, growing at 69%. The B segment or compact segment exports saw the highest numbers at 44,979 units, a 131% jump, followed by the mid-size segment at 21,097 units, up marginally by 4% and the A segment was at 6,445 units, up by 99%.
Tata Motors reported total sales of 26, 253 vehicles in December ’03, an increase of 67.3% over 15, 695 vehicles sold in December ’02. Apart from the ‘real people’s car,’ Tata Motors has stepped on the gas with a slew of launches. At the inaugural day of the 7th Auto Expo, the company launched a sporty new-look Indica V2, and unveiled the Indigo Marina – a premium estate car under Rs. 6 lakh – and a new range of passenger buses. The firm is also working at launching application-oriented options on its 207 light pick-up truck platform.