Nanomania sweeps India

By M H Ahssan

The rush of luxury-car owners seeking to buy the Nano, the world's cheapest car, was not the only surprise hours after advance bookings for the latest product from Tata Motors opened across India on April 9.

At the Concorde Tata Motor showroom, in central Mumbai, a roadside cobbler, Maruti Bhandare, paid the equivalent of US$2,819 as an advance payment for a Nano Deluxe. The base model costs around $2,000.

Maruti Bhandare, whose name is also that of Nano's biggest competitor Maruti Suzuki, became a star attraction for TV news channels. Next morning, he was India's most famous Nano hopeful buyer, and possibly Asia's first roadside cobbler to pay 75% up front for a deluxe model car.

Yet many more people like Bhandares could be out there. For the first time in India, advance car-booking forms were provided for the Nano launch, and Tata Motors had sold more than 1 million for the Nano at $6 each since April 1. For the first time, buyers paid 75% and upwards of the total car cost in advance - and that was without being allowed the benefit of a test drive.

Tata Motors could pull in an estimated $1.4 billion from Nano advance bookings. That will be a useful lift for the cash-strapped company, which by June has to service $2 billion of a $3 billion loan incurred in buying British car brands Jaguar and Land Rover.

Tata is struggling with production problems for the Nano, which was unveiled in January 2008. Barely 3,000 Nanos roll out monthly, against the planned annual production of 250,000. To meet demand, Tata Motors, part of the $62.5 billion Tata group, plans to allot 100,000 Nanos in a randomly computer-generated lottery after two months.

Though Tata group chairman Ratan Tata said he is targeting the Nano for small towns, interest was bigger in larger cities, although demand there cut across income groups. Dealers in metropolitan centers such as Kolkata hired more staff and security to deal with the rush.

"To my surprise, even owners of BMWs, Audis and Mercedes cars have bought Nano booking forms, besides the middle class," said KLK Paul, general manager of Nano dealer Wasan Motors in Mumbai.

Paul told Asia Times Online that his three Mumbai showrooms saw 5,000 to 6,000 people, with 1,000 Nano booking forms sold in two days.

Cobbler Bhandare represented one extreme of prospective buyers of the "People's Car", as Tata Motors has dubbed the Nano. "The Nano is based on an emotional desire to provide a safe and affordable mode of transport for Indian families which were exposed to the weather and other dangers," Ratan Tata said in March.

Tata ought to have remembered that emotional responses to problems produce only new problems. Besides production headaches, the Nano has raised questions as to whether it was seducing into car ownership an income group, such as roadside cobblers, who may be vulnerable to the costs of maintaining a car.

Ratan Tata said he embarked on the Nano project after seeing a family riding a scooter in a monsoon night in Mumbai. Yet a parallel question is whether unleashing the world's cheapest car on the world's second-largest middle class can solve transportation problems for the middle class family or increase their daily commuting misery.

TV anchors at the Concorde Nano showroom excitedly hailed Bhandare as the "common man" for whom the Nano was made. Encouraged by a cup of chai, or spicy tea, across the road from his workspot, he laid bare his thoughts to Asia Times Online on why he was prepared to pay nearly twice his annual income as an advance for a car.

Bhandare said he had saved for six years to buy a motorcycle for about $1,000, but began saving an additional $3 daily to buy the Nano when it appeared in 2008. He earns $140 a month, he said, from one of the cupboard-like, tiny roadside shoe shops that dot Mumbai.

Bhandare said he doesn't know how to drive a car and hasn't yet thought of getting a driving license. He had not consulted anyone about buying the car, until he reached the showroom.

How often would he use the car?

"I may use the Nano twice a month to take my family to the temple."

What about monthly expenses to run a car? His "daily car budget" would be "30 rupees [60 US cents]".

That is well short of the costs estimated by a "professional" in the car business, elderly cab-driver Salim Mohammed, who said 2,500 rupees a month would be needed to run a car on the clogged roads of Mumbai, India's financial hub, given use of about 20 kilometers a day. "Less than 1,000 rupees would be needed if the car is taken out sparingly."

So Bhandare could be okay with his 30 rupees daily car budget if his Nano is largely a stationary family showpiece and he doesn't run up garage bills, parking fees and waste fuel in the city's traffic snarls - which the Nano could worsen, their sales helped along by banks.

The Nano could increase India's car-owning population by 65%, according to a Crisil market survey, while 17 leading Indian banks, besides Tata Motors, offer loans with monthly installments starting at $50, the cheapest they have offered for a car.

The State Bank of India's loan eligibility for a Nano mentions as potential borrowers self-employed people earning $2,000 annually to salaried workers pulling in $1,500. An office peon in Mumbai earns $1,900 a year.

Just how well the new car will perform in the testing circumstances of everyday urban traffic will be revealed in the coming weeks. But no question marks remain over the Nano design. It delivered on promises of comfortable inner space. All six feet-plus of this correspondent could fit into the back seat of the 633cc car, with an astonishing five inches of legroom to spare.

"The spacious interior is the biggest surprise," agrees Joseph D'Silva, resident of Aberdeen, Hong Kong, who visited the Concorde Tata Motors showroom. He estimates that the $2,000 Nano in Hong Kong would have running costs of $3,300 a month. "Even though my family can afford a Mercedes Benz, I don't own a car in Hong Kong because public transport is very good," he said. "That should be the way forward for cities such as Mumbai."

Others wanting the Nano as the second family car were more cautious. "My father wanted to buy the Nano, but I said we should wait and watch to see how it fares on the road," said Rishi Bhandoo, advertising manager at The Statesman, a leading English daily from West Bengal state.

Nano relocated its factory site last October from West Bengal, in Singur, following violent political agitation protesting the factory being set up on alleged agricultural land. The alternative factory site in Gujarat state is expected to be fully functioning only from next year.

Bhandare said he won't wait long for delivery of his car. "If I don't get the Nano from the first allotment, I will cancel my booking and buy a motorcycle," he said.

Sometimes in life, we regret having got what we wanted most. So in six months, he and other prospective buyers will know whether they are lucky to own a Nano, or be cursing their desire to have got one. And some will be content sticking with more traditional transport to battle for road space with Nano trendsetters.