Save power while you Google. Use Power Google!


Friday, January 18, 2008

People's car! Really?


R. K. Laxman's cartoons glorified the common man's grief. Then came Deccan, which made the common man to dream to fly. Now, that Deccan has become Simplify, his feet are back on the ground. It's time for a smaller dream -- a dream to own a car. Tata Nano, widely known and promoted as the people's car could help realize that dream -- if it really existed in the first place. But, lets not doubt that and assume that every middle class family dreams of owning a car.

With a price tag (ex-showroom) of just Rs. 1,00,000/- ($2500), less than half the price of any other car available in India, (or in the world), it would seem to be a very attractive proposition. It has been promoted that a bike owner who spends Rs. 60,000-70,000 on a bike could spend a "little" more to buy a Nano. A simple calculation and here is where the irony lies!

India has a huge middle class with an average income of roughly Rs. 10,000. And then, there is an upper middle class, the one which actually buys a Rs. 60,000 bike. Even Ratan Tata had imagined providing a car to a family of four travelling on a Bajaj scooter that costs roughly Rs. 22,000. Now, you need to calculate yourself, what a "little" more means. Add to that the maintenance costs and fuel spendings (which would atleast double - in ideal conditions).

The numbers count and here they are:

Bajaj scooter owner with average usage of 240 kms per month
Average income: Rs. 10,000
A two-wheeler loan: 3 years EMI Rs. 750 (on a loan of Rs. 22000) even interest free options available
Fuel costs: Rs. 200 per month (Mileage: 60 kmpl, Petrol: Rs. 50 per liter)
Maintenance: Rs. 50 per month (average)
Monthly cost on travel: Rs. 1,000

Nano owner with average usage of 240 kms per month
Average income: Rs. 10,000
A four-wheeler loan: 3 years EMI Rs. 3750 (on a loan of Rs. 100000) Rs. 15000-20000 extra for road-tax, upfront payment, etc
Fuel costs: Rs. 500 per month (Mileage: 25 kmpl, Petrol: Rs. 50 per liter)
Maintenance: Rs. 250 per month (average - depending on how Nano actually performs)
Monthly cost on travel: Rs. 4,500

So now lets decide whether it is indeed a people's car. Not just yet!

Does this mean Nano will flop? Not necessarily. It will find buyers in the owners of Pulsars, Unicorns and Apaches. And once the diesel version is out, we will find the Indica cabs being gradually replaced by Nano cabs. Others might still buy it, but not for daily use, only for weekend outings and family occasions.