Tata’s Nano Hits the Streets

nanoRedefining Personal Mobility:  The Tata Nano May Change This World

By Philip Shaw M.Sc.

With Dr. A.K. Enamul Haque

One of the things I really enjoy when I travel to Bangladesh is a drive through the countryside. On my recent trip to Bangladesh in January of 2009, Enamul and I traveled up to his home city of Sylhet, Bangladesh.  On the way we went through some beautiful Tea Garden country near Srimongal.   On the way back to Dhaka we went through some great looking rural countryside south of Sylhet where it looked like the Canadian prairie.   It was a wonderful drive.

That might be all changing in the future if the Indian company Tata has anything to say about it.  For those of you who have missed it on March 22, 2009, the Tata Nano was introduced.   For those of you who missed my other columns about the Tata it’s the Indian vehicle that’s going to cost $2000 and it weighs a mere 600 kg.  For a growing Indian population it’s going to change the way people move around.

It is quite a paradox from the car industry that we have here in the West. With the Western world experiencing an economic and financial meltdown the North American car industry as well as that in Western Europe is really experiencing a rationalization. For instance in North America it has always been common for us to have much, much bigger cars than what the Japanese have been historically producing.   This served the industry well for many years when energy was cheap and the economy was very, very good. However in July 2008 when everything started turning south in the Western economy the car industry has really suffered.

Interestingly enough, the introduction of the Tata Nano to the Indian car market isn’t going to just stop there.  Tata has plans to introduce the Nano to the North American market.  Now I have a hard time believing that. For instance a lot of vehicles in my local neighborhood sell for $30-$40,000 Canadian.  So if you introduce a vehicle from Asia, from India for instance, which retails for about C$2500 that should really shake up the pricing of vehicles in North America.

Of course were at the initial stages of this. Tata still doesn’t have the Nano off the ground in India.  Sure it is on sale now but still there are critics who think it might not be successful.  A successful launch in India will be paramount to Tata selling the Nano in the North American and European markets.  However, in my mind, it should have a huge effect on the mobility of people in Asia who cannot afford a vehicle.  Having been in many an Asian traffic jam, I cannot imagine adding a whole bunch of smaller cheaper vehicles to that mix.

Take for instance my experiences in Dhaka, Bangladesh. I have had a whole bunch of experiences being in a car in Bangladesh and being in a traffic jam.  My buddy Enamul can surely vouch for that.  For instance on my last trip there on the way back from Sylhet, we approached Dhaka city.   Enamel told me that the government had plans to build a fourth entrance into Dhaka city.  However, they were put on hold and Dhaka still only has three entrances to the city. Needless to say, we spent much of that night in a terrible traffic jam trying to get into the city.

That will be essentially the problem in Asia and other parts of the world where the Tata Nano will be sold.  It is one thing to produce a cheap vehicle for the masses.  It is another thing to produce this vehicle when there is not the infrastructure for those vehicles to be driven on.  Let me tell you something. The trans-Asian Highway is nothing like the superhighways of North America or the autobahns of Europe. The Nano will surely make it even worse.

Take Bangladesh for instance. It is a country of about 150 million people, who live in a relatively small land area compared to Canada.  When we drove back from Sylhet that night, traffic was light.  Simply put, not a lot of people outside the cities or even in the cities of Bangladesh have cars. So the drive home was leisurely until we hit that traffic jam going into Dhaka.  Put all those new Nanos on the road and suddenly that traffic jam might stretch for 300 kilometers.

However technology cannot be stopped. Asia’s challenge will be to adapt to this new automotive technology and create the infrastructure to make it all work.  It surely might have the effect of increasing domestic tourism in places like India, Pakistan, Bangladesh and other parts of the world where personal mobility has always been a limitation.

Of course in the West the challenge will be to adapt to these new cars when all our other cars are priced so much higher. However, isn’t this familiar, Asia exporting goods and services to the west and doing it better and cheaper?  I think so.  The Tata Nano surely holds the capacity to change this world like we’ve never known it before and you can bet, I’ll be watching.

South Asia is not yet fully prepared for the Nano!
By  Dr. A.K. Enamul Haque PhD

Tata has announced the introduction of the Nano in India.  Like Phil many people in this world are also a bit worried, while thinking about the consequence of this car on the roads of South Asia. The other day a friend of mine said the same thing to me, as he also could not imagine what will happen once the Nano hits the road. To me it is like we do not want others to have it when I already have it. However, I do understand that people who are thinking in this line are not envious of these people. They are rather worried about the traffic jam that might hit the roads.
When I first went to Canada in 1980, I was amazed to see the number of cars on the roads, the design of the highways, and the freeways.  The roads were so fascinating to me that I decided to buy a car within the first year of my arrival in Canada.  Needless to say that during my stay in Canada I enjoyed it the most. I felt this newfound freedom in me and traveled thousands of miles in Ontario and Quebec with my little Chevy.  I still remember the day when I decided to come back to Bangladesh and realized that I may never have a car when I’m back at home. It was indeed a sad memory for me.
However, things changed very soon in Bangladesh and within six years of my return to Bangladesh I bought a car and got my freedom back. I’m pretty sure that millions of people in India, Bangladesh and in Pakistan are waiting to see that happens to them too.  They are indeed worried about the traffic jams but surely they should not be held back.  Already cities like Dhaka, Kolkata, Delhi, Bombay, Bangkok, etc., are crowded.  Now it takes nearly 2 hours to go from one end to the other of Dhaka, which is only about 10 km.  A week ago I was in Bangkok and I thought of buying a piece of software. I was going to a shopping plaza, which is about 2 km away from the hotel where I was living.  It took almost one and a half hour to travel to the mall by taxi. It took so long that I was worried about returning to my meeting on time.  As such, on my way back I was trying to be innovative. I found there are motorbikes with driver who will give you a ride back at a cheaper price and of course, it will be much quicker than a taxi ride. So you can see the people of Bangkok found an alternative to the taxi. I believe the whole South Asia will need to think about these traffic jams more seriously.
Construction of roads, highways and freeways must go at a much higher speed than what there is now.  Average growth of the transportation sector is more than 14% in Bangladesh and so the average growth of highways, freeways, roads, and parking spaces must grow at a speed higher than 14%.  This is a big challenge for the governments of these countries.  So, introduction of the Nano will surely create a problem for these countries. They cannot say no to the Nano nor they can build more roads!  So to me doomsday is coming. The question is why?
South Asian governments are still notoriously weak in terms of collecting taxes, levying fees, or charging for parking spaces. I cannot imagine that governments can introduce these instruments within a very short time particularly when these economies are also being threatened by the global recession.  Fortunately, the Nano is not coming in this year.  On the other hand, I still have doubts about the successful introduction of the Nano in North American markets.  Why, because North American consumers are not fond of small cars.  On the other hand, it is likely that the Nano will be successful in the European market where small cars like “half cars” are very popular.
Finally, the average annual income in South Asia is about $480 US.  40% of the people of South Asia are still living below the poverty line and cannot afford more than two meals a day.  About 10 to 15% of the households are capable of buying these small cars.  So cars for all will still be a slogan and not the reality.  Can you imagine a day when 50% of the people of South Asia will have cars?  If so, how soon?