Car-makers Plan to Launch $3000 Automobile in India

India's city roads are best characterized by chaos: snarls of cars, trucks, buses, two-wheeler traffic, polluting three-wheeler auto-rickshaws, bicycles, bullock carts, crowds of pedestrians and the occasional cow. But is it about to get even crazier?

Recently, India's car industry has been abuzz with talk of cars marketed at the up-and-coming, wealthy middle class and a number of India's automobile companies — most notably Indian auto giant Tata Motors — are surging ahead to launch models priced at a mere 100,000 rupes (approximately $3000), probably by early next year. Though there is great demand for an affordable, entry-level vehicle, the $3000 car also raises alarming questions about its environmental impact.

Four years in the making, Tata Motor's plans to produce a so-called "one-lakh car" (one lakh being the Indian term for 100,000) are aimed squarely at members of India's 300-million-strong middle class. Dubbing it the "People's Car," Tata hopes to entice consumers with a four to five seater, four-door, rear-engine car with about 30 hp (horsepower)."It's not about [status] - it's about necessity. People require four wheels, with A/C. They cannot go on a bike or scooter anymore. It's entry level cars. Larger cars are for people with extra money. The first car is always a small car," says Himanshu Tandon, a general manager for sales at one Delhi Hyundai dealership.

The potential for growth and profit in the small-car sector is high. It is estimated that India has a vehicle density of only seven cars per thousand people, compared to the US which already has 477 per thousand. In 2006 alone, an astonishing one million cars were sold in India, with the annual growth rate of sales pegged at 16 percent.

With these figures, it's no wonder car-makers are all jumping eagerly onto the proverbial bandwagon. Nissan-Renault recently revealed that it too would also strategize how to produce its version of the $3000 car, while India's Hero Group, a well-known motorcycle manufacturer, is reportedly collaborating with a Canadian company on a mini-car. Maruti-Suzuki is busy with what they call a "competitively-priced" 660cc vehicle; South India's Bajaj Auto will introduce their entry-level model during next year's national Auto Expo. Even Xenetis, India's low-cost computer maker, intends to develop a low-cost car. Tata Motors is going even further by exploring different possibilities with General Electric (GE) in whether the cars could be made from GE's engineered plastics.

Despite all these shiny, bright ideas, the environmental cost of such a car is not lost on some who argue that instead of pursuing a wasteful, Western model of transportation, public transportation instead should be emphasized, especially at time when India and China are both facing intense pressure to reduce their carbon emissions.

"What we are really worried about is the congestion and the pollution," said Anumita Roychowdhury, associate director of the Delhi-based Centre for Science and Environment. "In Delhi, public transports manage more than 60 per cent of the transport demand and, if you add the numbers using the new Metro, that is going to increase the [percentage using public transport]. Our immediate policy should be to retain and protect this so that people who are already using it... do not make the move to cars. It is aspirational - people who want to buy cars. But the question should be how easy should we be making it for them?... Once they have started using cars it, will be hard to get them back."

Indian president Manmohan Singh commented however that India's current growth may go hand-in-hand with environmental self-empowerment. "Due care must be taken not to allow growth and development prospects in the developing world to be undermined or constrained ... More and not less development is the best way for developing countries to address themselves to the issue of preserving the environment and protecting the climate," he said. Via:The Independent, The Hindu

Tags: India | Transportation

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