Published on
The Sunday Herald (Scotland)

Plastic Car Will Be World's Cheapest

Raymond Thibodeaux in Kochi

THE narrow, pot-holed roads of this boomtown on India's southwestern coast are a sea of humanity on wheels. Here, as in most of India, right of way is accorded by a vehicle's size - motorcycles stop for cars, cars stop for trucks, trucks stop for buses, and buses stop for cows.

0819 04 1So, in a country where size does matter, an Indian car maker is set to roll out the world's cheapest car next year, enabling those at the bottom of the traffic pecking order to move up a notch.

And it will put the Indian dream of owning a new car -- a symbol of status in a status-obsessed culture -- within reach of tens of millions of people.

The car maker Tata Motors has not divulged many details about the car other than its shockingly low sticker price of 100,000 rupees, or 1 lakh in Indian currency. That's just over £1200, less than half the price of the lowest-priced cars on India's market today.

"It's going to be a revolution," said Naveen Khunna, 36, who plans to buy eight of these cars for his New Delhi-based pharmaceutical supply company. "Most people use motorcycles and mopeds, but not because they want to -- they prefer cars but can't afford them. That is definitely going to change."

The car's rollout comes as India's economy expands at a faster-than-expected rate of 8% a year, second only to China. In this country of 1.1 billion people, sales of small cars are expected to double to two million in the next three years, as the country's emerging middle class expands from 50 million people today to an estimated half billion by 2025.

Supposedly, the 1 Lakh Car -- Tata has yet to release its official name -- will be a 4-door as big as a Volkswagen Rabbit, much of it will be plastic, and it will have a rear-mounted 30-horsepower engine. By comparison, a Rabbit has about 150 horsepower.

Tata is counting on it being a mega hit. It better be, analysts say. A huge volume of sales is necessary to make up for the car's tiny profit margin of less than 3%.

But its success could spell trouble for India's urban planners and environmentalists who say a drastic increase in car ownership could overwhelm the country's already crowded roadways and worsen its air quality.

The need for more affordable cars is sometimes glaringly obvious. In India, it is not uncommon to see entire families of four or five, precariously balanced on a motorcycle, weaving through traffic.

Sudheer Mahanan, a government forest warden, often carries two passengers on his moped, his 11-year-old son, Harikrishna, and his five-year-old daughter, Harichandana, who is small enough to fit on a flat space between the seat and the handlebars.

He is among those Tata is targeting for its 1 Lakh Car, largely by offering lucrative trade-in deals for motorcycles and mopeds. But even at 1 lakh, the car is out of his price range, as it is likely to be for the two-thirds of India's population who live on £1 a day.

"I've already taken out a bank loan to buy this moped," said Mahanan, 42, after being waved out of the traffic for an interview. "For me to buy a car, it would need to be about 50,000 rupees," he said. That's about £630. Fat chance.


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As it is, only eight in every 1000 Indians own a car, compared to roughly 500 Europeans and 770 Americans per 1000.

Environmental groups have already expressed "great concern" about India's air quality, especially in most of the country's largest cities, where they say the air quality is already at "critical levels."

"Can you imagine if even 1% of Indians had a car? Our roads can hardly handle the number of cars out there right now," said Mahesh Mehta, an environmental attorney based in New Delhi.

"We should not be following the Western model of car ownership. That would be disastrous in India. We need better public transportation, better railways and subways," he said.

India's parliament is expected to plow about £152m into the country's outgrown infrastructure, including building and widening highways across the country, according to Indian commerce secretary, GK Pillai.

If the 1 Lakh Car is as successful as its makers hope, it is expected to boost sales in spin-off industries such as petrol stations, car parts stores, auto repair shops, and driving schools.

The cheap cars are expected to energise an already booming car market in Kerala, especially in places such as Kochi and Trivandrum that have fast-growing trades in tourism and technology.

In Kerala, India's only communist-run state, the occasional roadside posters of Che Guevara and red flags with gold hammer and sickle increasingly share space with huge billboards touting Western-style bling, including new car ads that say: "Welcome to civilization."

Azad Pathan owns a Tata dealership on Trivandrum's "Motor Mile," which has about a dozen dealerships with polished showrooms for new cars and trucks.

"It is definitely going to be big. But then, Ratan Tata chairman of Tata Motors is a man with a big vision," Pathan said.

Will the car's wafer-thin profit margin leave little room for the very Indian sport of bargaining?

"This is India," Pathan said. "I'm sure we are going to get customers coming in here wanting us to throw in free floor mats and mud flaps."

©2007 newsquest (sunday herald) limited

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