Thursday, February 15, 2007

A latent market for the 1 lakh car

The last few weeks has seen the Tatas in spotlight; it is perhaps rightful at this point to take a closer look at their big gamble. The 1 lakh car. The car may or may not end up costing a lakh ( it will be a bit more than that), but it will surely be affordable. I dont know much about the car and my inputs are mostly from here and there.

The only thing that is "despicable" on roads in India from a "wanting to own" perspective as the link above rightly points out is the autorickshaw. The autorickshaw with its qualities could qualify as a people mover. But it has never been so. I am not entirely sure why, but it has something to do with the build, lack of privacy and the general infra dig feel about it. ( I mean, to start it if I have to bend and break my back each day - no way.)

So, who will buy the 1 lakh car - I assume here (as the link points out) that it will be a cute thing to have - a cute car would be a great selling point. There are many who would like to buy a car, but are put off by the 3 lakh odd price tag. Especially in a place like Bangalore (or any non metro) where public transport is not great and people move around on two wheelers. But between two wheelers and cars is a big gap waiting to be filled. This segment will be the bread and butter segment for the car and it is a huge huge market.

And if, as reports indicate, that it will be gearless - great. That means it will attract another segment - a segment that thinks that cars are difficult to drive. If it is cute enough, another segment - that of "lets own a second car" will also open up (today only the Reva has this segment and thats not saying a lot).

If it is good enough to replace all those two stroke rickshaws off the road, great.

As I had said earlier the car has the potential to create cascading effects for the economy. The government may be spurred to build better, newer roads or parking lots may become mandatory at commerical and residential buildings. Low cost airlines are making the government think about upgrading our bus stations that pass off as airports, perhaps the car will show the way to better roads (and better traffic sense - no thats not possible).

Of course petro prices can play spoilsport here, but we leave that out for the moment. If a company can do so much, it can also create an environmentally friendly engine.

Update: The 1 lakh car is being tested.

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