Tata Motor brings car of $2500 – Can India handle it?
Posted by evolvingwheel on January 10, 2008
First post of 2008! Hope this one talks about my interest for this year 🙂
So the Tata Motor Companyof India has finally accomplished an unprecedented feat by bringing a car that costs a meager $2500! From the post-independence era, Tata has been delivering indigenous solutions for the Indian automobile market and has become a household name when it comes to trucks and cars that can sustain the harsh environment of heat and monsoon and strained infrastructure. However, this time Tata has done something that could not only change the landscape of Indian automobile market but could also shakeout the socio-economic, environmental, and infrastructure aspects of a country beleaguered by poverty, income disparity, and an emerging middle class with increasing buying capacity.
I am not talking here about the car itself or the business impact from the perspective of automobile industry. You can find all those in this link. What I am interested in is the short-term and long-term effect of bringing a car to the market that could invigorate a whole different buyer’s segment – the bottom of the pyramid (as claimed by Prof. Prahlad).
Let me bring few things into perspective and ask some critical questions.
Buyer’s segment – two wheeler buyers or the ones with low income and somewhere between lower middle class and wannabe middle-class. Millions like that live both in cities and villages. Consider cities first- if the car ownership increases 4-6 fold, does India have that road infrastructure to support the traffic? Even today the country is struggling with new cars hitting the roads. How would this increased number be tackled by a antagonizing political environment fighting over draconian policy implementations and let aside implementing a overhaul change?
In village side – who will take the onus of building roads to the deepest corners where these cars (and ridership) would penetrate? If this car sustains the environmental and infrastructure hardship and ends up surviving for more than 5 years on Indian roads, the explosion of ownership can be daunting. Just think about the environmental impact, recycling of scrap, and junk spare parts after usage!
Now, implications on the positive side are enormous. I can see how cell phones changed the whole way of doing things in the cities and semi-rural areas. Social innovation entered deep into the countryside when fishermen would use cell phones to find out the wholesale market price and distribute their catch according to the prospects of profitability. This car can bring changes like that but in a more amplified scale!
And then there are the prospects of employment style, pattern, location, and timing shifts. When a biker wouldn’t try to go beyond a certain distance and limit his/her business/profession according to those restrictions, this car could break down that deterrence and create whole new format of earning, living, and spending. There is a very good possibility of a nationwide economic and henceforth a social shift that could emerge from communities that fenced for years!
Opportunities as well as problems are enormous. I am more excited to think about the future trajectory of the market and human behaviors when such innovations enable a possibility beyond ones imagination.
Picture: Ratan Tata
Add On: News release – http://www.msnbc.msn.com/id/22575262/