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Nano car. Big questions. (Part 1 of 2)
Is Ratan Tata a hero or a villain? His Tata Nano car is set to put India’s lower-middle class on wheels with its unbelievably low price, but at what cost to the environment?
If you read the New York Times, Time, the Los Angeles Times or the Australian, you will find that there is a new villain on the global stage. He is Ratan Tata, chairman of the Tata Group, India’s largest conglomerate.
On the other hand, if you get your news from India, Africa, South America and other parts of the developing world, you’d probably think that Ratan is a great man. Perhaps even one of the greatest ever lived.
So is the 70-year-old, scion of the most famous business family in India, hero or villain?
That’s a tough question. The answer really depends on your view on one – and only one – issue: do the poor of the world have the right to own cars?
Ratan asked that question earlier this year. He was, of course, not the first to do so. Almost a hundred years ago, the same question was asked by Henry Ford.
Before Ford, cars were assembled by hand and were so expensive, only the rich could afford them. Ford introduced mass production in automobile manufacturing, which lowered his costs so much that he was able to slash prices – and make his Model T affordable to America’s emerging middle class.
That sparked the first debate on whether the “lower classes” should have access to cars. Those who were against it were fighting a losing battle. The Model T proved to so popular that 15 million were sold between 1908 and 1927 – a record broken only half a century later by another iconic car, the Volkswagen Beetle. The Model T brought automobiles into popular ownership. It conquered the vast distance of the United States, and turned remote spots that previously did not even exist on maps into boom towns. Above all, it stimulated the growth of the petroleum, rubber and many other industries, and essentially put America – and the rest of the world – on wheels. Ford was universally hailed a hero.
A century on, Ratan has followed in Ford’s footsteps. He has introduced another car produced by a revolutionary method that makes it so cheap, an entire class of people all over the world who had never been able to afford to buy a car can now own one. And this is causing panic in the western world.
The car is the Tata Nano, the cheapest car on earth. It retails for only one lakh (100,000) Indian rupee, or US$2,500. In the West, this is the amount a motorist pays for fixing his automatic transmission or getting a good DVD player for his car. In India, and soon in other parts of the developing world, US$2,500 will get you a brand new cute little car that looks very much like the famous European super-compact, Smart Fortwo, but at one-sixth the price. The Nano – which means “small” in Gujerati, Ratan’s native tongue (though many suspect he chose it to link his car to the high-tech, super-sexy and super-tiny iPod Nano) – measures just 10 feet, or 3.1 metres, from moulded bumper to moulded bumper.
But it has four doors and sits four comfortably. And not four dwarves, as some Western pundits have described it condescendingly. Soon after the Nano was unveiled at the 9th New Delhi Auto Expo, Goh Chok Tong, a former prime minister of Singapore and now its Senior Minister, visited Ratan and was invited to take the Nano for a spin. Goh is tall (nearly 2 metres) but he sat in the Nano with no sign of discomfort. The picture of him smiling broadly as he drove the little car is a great publicity shot for both Ratan and the Nano
As cars go, the Nano is not much of one. It runs on a two-cylinder (as opposed to four) engine. This lightens the Nano to half the weight of other small cars such as, say, the Maruti 800, currently the most popular low-cost car in India before the Nano came along. But it also reduces the power of the Nano. The engine – so small it can be placed under a rear seat for space saving – delivers only a maximum speed of 65 miles, or 104 kilometres, per hour. To Americans this is an ant’s crawl. But to the millions of Indians to whom the car is targeted, 65 mph is more than enough for travelling along India’s congested and pothole-filled roads.
After he had made up his mind to build a car that sells for only one lakh rupees – and announced it the world via an interview with the Financial Times in 2003 – Ratan made his Tata Motors, the kingpin of India commercial vehicles, throw out all its preconceptions of car design, manufacturing and maintenance – and started from scratch, on a blank piece of paper.
It took five years and a team of 500 engineers, designers and – unusually – mechanics, and endless discussions with suppliers to retool for new components, before the Nano was ready to face the public.
The Nano will confuse anyone used to driving a modern car. For a start, its instrument panel is in the middle of the dashboard rather than on the side of the driver. This allows Tata Motors to produce only one type of dashboard that will serve both left- and right-hand drives.
Then, the fuel tank of the Nano is not at the rear. It is in fact under the floorboard, again to save space. And the basic Nano has absolutely no amenities. There is no air-conditioning, no powered windows, no airbags, and not even a radio. (But two deluxe models will also be on offer.) And it has only one wiper.
But what really sets the Nano apart from all other cars is the way it can be put together. In America it is a common sight to see 18-wheelers carrying newly assembled cars from the factory to showrooms. The Nano, meant for India and other developing countries, cannot be transported that way. The roads are neither good nor wide enough. At any rate, putting up a car assembly plant is expensive and will drive up the cost of the Nano. (To see how a car plant adds to the cost of a car, look no further than the Maruti 800. It is built in India by Suzuki Motor of Japan, on the template of the Suzuki Alto CA71. The Indian government has subsidised the Maruti heavily to help its emerging middle class get its entry-level car. It is said to have written off the entire cost of the car plant. Even then the Maruti 800 sells for two lakh rupee, double that of the Nano. Had the cost of its plant been amortised through its cars, the Maruti 800 would certainly have cost many times its current price tag.)
Ratan was moved to build a super-cheap car by the common sight of an Indian family of four sitting on a scooter in pouring rain. "I observed families riding on two-wheelers , the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family," Ratan said. The mortality rate of two-wheelers in India is up to four times that of cars. To give these people, the lower-middle class, a safer and more comfortable alternative, Ratan had to build a car within the reach of these people whose monthly average wage is US$200. He had to build, in other words, a vehicle with the functionalities of a car but the price of a motorbike.
All the cost savings measures for the Nano would be useless if Tata Motors were to build expensive plants to assemble them. To overcome that seemingly intractable problem, Tata Motors came up with a solution that seemed ludicrous at first: put the car together by glue, and not wielding.
Amazingly, the method works. Using super-strong aerospace glue on components designed for that purpose, the Nano can be put together cheaply and by people who do not need an advance degree in engineering. In fact, it can be put together so simply that all Tata Motors has to do is to produce complete knock-down kits of the car and ship them to various locations, where its distributors would put the car together, under the supervision of Tata officials to ensure quality – and the Nano is ready for sale. Having come up with a car that can be assembled this way, Tata Motors then filed 34 patents for the technology and innovations of this revolutionary product.
> TO Nano car, big questions (Part 2 of 2)
Lee Han Shih is the founder, publisher and editor of asia! Magazine.