Medtem pa indijska Tata že dalj časa razvija takšen avtomobil s ciljno ceno 100.000 indijskih rupij, kar po trenutnih tečajih znese 2.500 ameriških zelencev. Kodno ime tega projekta je 1 Lakh car. (1 Lakh je oznaka za 100.000 rupij).

Tata’s one lakh car is the most expected car in recent times not only in india, the whole world is anticipating for the car. “The one-lakh car is a case study which the whole world is watching. If successful, the car can spark demand in a new segment all over the world” reports JD power an Automotive rating and research firm. That’s why every news and rumours about the low cost car is getting covered in almost every magazines, every newspapers and every webportals even the mighty Businessweek and BBC is reporting about the developments of the car. The most expected car has also become the most controversial car in indian history. Whether its the singur controversy or the competitors criticism in one or many ways the one lakh car is making news.
Whie the Chevrolet Aveo, currently the cheapest car in the US, costs around $ 10,350 while Europe’s low cost contender the Dacia Logan costs around 6000 euros. Coming to india while most manufacturers are finding difficult even to make a 100cc bike for Rs40000 Tata is building a car for 1 lakh ($2500) and Tata has to break its own achievements and has to set new levels of benchmarks in design, production, assembly, logistics and whereever they can to produce a car at such a price.
Can the Tata’s meet the expectations? Will the one lakh car convey the india’s potential to the world? Will Tata stick to its price tag? Will it make sense for Tata to have a car when other players are moving to premium segments? Will the more demanding customers will like the low cost machine? In this preview we will find answer for all these questions also we will know how tata is cutting the cost in all domains to adhere to its price tag.
Name for the Commuters car:
The most watched car in the Indian car space — the Rs 1-lakh ($2500) offering from the Tata Motors stables — is still unnamed, but company sources here believe that `Jeh’ is emerging as the `most favoured name’. “It has always been our Chairman Mr Ratan Tata’s dream to name one of the cars after J.R.D. Tata,”said a Tata official.
What’s the 1 lakh car all about?
Tata says the proposed Rs 1-lakh car would be a vehicle that “will seat four to five people and have a rear engine. It will not be a scooter, three-wheeler or an auto-rickshaw made into a car.” “It will also not be a stripped down car. It will be an inexpensive car,” he said, but added that it would obviously not have the finish or the high speed or the power of a larger car. It would be a rear engine, 4-5 seat, four-door car with about 30 hp (horsepower) engine.Though it is tough to preview a car which is guarded highly by its manufacturer, we will unveil as much we can in this post.
Engine and Transmission:
It is almost sure that Tata’s no frills car will be an rear engined car –to save the transmission cost. Tata Motors have tested an 550-650cc engine but felt it is not sufficient to propel a four seater and they decided to step up the engine. Robert Bosch the international Auto Electronics major has acknowledged that’ its latest success is an order to supply alternators, brakes, and gasoline and diesel management systems for the one lakh car from Tata’. So a diesel and petrol unit is sure for the one lakh car. It is believed that finally tata settled for a 660cc petrol unit and 700cc diesel unit to power the one lakh car.
For the 660cc petrol unit Bosch has designed a special fuel injection system called “value motronic” - the cost of the system is roughly half of a full scale system and it is said to be more efficient. For the 700cc diesel will be a CRDi unit( it’s DICOR for Tata) too Bosch has developed a special injection system for this world’s first twin cylinder CRDi engine. Earlier in 1998 when Ratan Tata unveiled a concept car named ‘zing’ he initiated the idea of producing the 1 lakh car using scooter parts. Yes, Tata opted a basic, automatic or variomatic transmission, instead of a manual transmission set up. Not only it will help the tata in cutting the cost as Tata targets millions of two-wheeler users for its 1 lakh car it will be easy for the tata to lure them. In the combination of a smart petrol unit or a DICOR unit with automatic transmission the one lakh car will be dearer not only while your buying it but also it will be softer on your monthly fuel bill. Overdrive reported petrol version of the one lakh car registered mileage/ fuel efficiency in the region of 26kpl(65mpg) in the internal Tata tests and but Tata is gunning for 30kpl!(70mpg) enough isn’t it? if not, Tata – Bosch DICOR unit may satisfy our thirst. On the performance side the petrol unit is believed to produce 33bhp with a top speed of 120kph(80mph)
Few disadvantages in a rear engine car:
* uneven weight distribution and hence poor traction control
* poor cornering and poor handling
* poor engine cooling and hence more chance for engine overheating
* almost no boot space and cramped space for rear passengers
Design and features:
Tata’s zing and indiva concept cars exhibited at 1998 and 2002 auto expo would be base for the proposed one lakh car. Apart from the concept cars, the one lakh car is sure to have few signs popular rear engined cars such as volkswagen beetle, Fiat model 500 and porsche cars. Tata has outsourced the design to Italy’s Institute of Development in Automotive Engineering (IDEA) which designed most Tata;s cars including indica. The one lakh car probably will not be designed to win any beauty contests but at the same time it will not be a ugly duckling either. As evident from the indiva, tata’s small car will embrace not so contemporary tall boy look similar to Maruti Suzuki’s WagonR. Under the front hood the one lakh car will have a small storage space, “like an overhead bin” on an airplane.
As bonnet is used for the storage space, headlamps will not be a wraparound, it may be quadrilateral in shape and the headlamps will sit on the smaller bonnet. As the one lakh car is a rear engined one, i believe drivers will have more fun with this car, starting from steep rake to the larger front windshield is truly what every driver loves to have. For the one lakh car there will not be a distinctive grille but because of the round bumper, Tata’s will carry its familiar ’smiley’ front look to the one lakh car as well. Tata’s small car will make use of a single wiper instead of two, not only for giving the car a cleaner look also for cutting the cost of windshield wipers for the people’s Car in half. In the sides as Tata will source smaller tyres from its cargo carrier ace for the one lakh car and beacuse of this Tata will not spruce up the fenders. Not so full wheels and black door handles will feature in people’s car. Identical rear view mirrors will be used on either side to save cost. In the rear one lakh car will be more upmarket since the car will have pillar mounted taillamps similar to its sibling indica.
Inside, the one lakh car will feature all the basic amenities, instrument console would have a speedometer, an odometer and fuel gauge. You have to cut costs on everything—seats, materials, components—the whole package,” says Tata Group Chairman Ratan N. Tata. These are the words which are going to be reflected in upholsteries and door trims.
Some myths about the one lakh car:
Though too early to call some news about the 1 lakh car as myth, from Tata words we can atleast flush some rumours about it. Some scoops on car’s features includes - Curtains replacing glass windows, removable bolt-on seats instead of the regular ones, roof will be an optional add-on, and plastic body panels instead of the regular metal panels. Yes, Tata had talks with General Electric for using its re-engineered plastics for its low cost car and Tata may make use of modern adhesives instead of welding to cut down cost, but still there is no definite direction in this issue but certainly there will be no curtains. The one lakh car will be a complete car with definite roof and glass windows.
Will the much hyped Tata’s 1 lakh car fizzle?
* Already two wheeler manufacturers has burnt their hands by lower pricing to increase their market share. Since the steel prices are soaring and other raw material prices are continuously increasing it is necessary to produce a vehicle which will not burn out your topline growth. in fact tata motors itself acknowledge that margin pressures are high for the financial year 2006-2007. The car is expected by the 2nd half of 2008. The input cost is sure to head northwards and can tata make anything out of the one lakh car evenif sells 80% of expected sales.
* Nowadays even rural customers, one of the main targets of the car are becoming demanding and less forgiving. Existing people’s car Maruti 800’s sales volume has been sliding steadily during the past two years.
* When worlds safest car manufacturer’s like toyota are just launching their products in the 10lakh segment depriving safety system we cannot expect any safety systems in the 1 lakh car. but the question is can the Tata’s one-lakh car($2500) meet the upcoming safety and emissions regulations? India is going to have much stricter emission norms in the near future and india will be forced to enact same in safety side too. Road deaths and poor air quality are both growing problems in India. I believe that tatas can meet the first challenge(emission norms) since the one lakh car will be destined to india and other low cost market not for europe or US( since adding equipment required for safety and emissions control in Western markets would automatically bring the price of the car easily up to $6,000 to $7,000). But if the indian government makes any safety regulation what will be future of the one lakh car. But Tata claims the one lakh car($2500) will even pass a crash test.
* Here is the case of Tata’s ace, which is exported to nepal and srilanka and planned for south africa but certainly not for the developed countries. Although it emits very little carbon dioxide thanks to its tiny engine, meeting other emissions standards and crash regulations would be much harder.
What if Tata 1 lakh car succeeds?
* If Tata’s one lakh car succeeds as Ratan Tata expects no longer a family will be hanging in a bike it will ensure safety of those people. On the other hand as already India is struggling with the infrastructure needs Tata’s one lakh car (and others following) will add insult to India’s injuries and it will also have heavy impact on our environment.
A problem of plenty:
* Can indian which now has 1.3 crore vehicles can bear additional 10lakh cars per year from Tata’s alone(in addition to the tata’s other cars). Based on manufacturers expansion plan it is estimated india will build more than 3.3 million cars in 2010, If Hero group and Bajaj choose Tata’s way this figure will shoot up to incredible levels. According to SIAM (Society of Indian Auto Manufacturers) India is adding 1.4million cars a year as indian car industry and is growing at 20% every year. My very obvious question is Will there be enough buyers? certainly not! India is expected to add only just over 2.3million cars in 2010. Manufacturers may bet on exports but that too is not so promising, india exported only around 2 lakh last year, This means that exports have to grow by over 70 per cent year-on-year for the next three years in order to reach the million mark by 2010. However, the industry has managed an average growth rate of 15% in last three years.
* The end result of this surplus capacity will be intense price war between manufacturers and ultimately their margins will get down. Tata itself will face some serious problems if their 1 lakh car ($2500)succeeds, manufactures who cannot such produce low cost car will put up more products in other segments where Tata now has significant share, ultimately this kind of volume game may swallow the profits of all manufactures. The race will affect every bit of business as much as Henry Ford’s model T did a century ago.
* More the cars, more is the pollution not only due to burning of fuel but also due to the dumping of low quality parts used in the low cost car. Dont be surprised if Sunita Narain of CSE – Centre of Science and Environment who raised concerns on pepsi and coke raise concerns on Tata’s one lakh car.
* More terrible the traffic will be, The country’s poor-quality road network is slowly improving, but it is heavily over-used. With India’s transport arteries already so badly clogged, a boom in sales of low-cost cars could bring about a complete seizure.
* Real estate prices may shoot up as the need for the space(parking) raises and parking charges will become more costlier. The result will be owning a car will become more expensive.
Tata’s first Global launch:
Tata Motors plans to sell one million of its one-lakh cars. Tata’s West Bengal plant for the one-lakh car will have a built-up capacity of 500,000 units on an annual basis; for the remaining 500,000 units, there are plans to set up satellite plants across the country at strategic locations that would make it cost effective to manufacture and sell the car in the shortest time possible. Tata Motors is reported to have talks with Magna a contract manufacturer for making the Rs 1-lakh car($2500) at many satellite manufacturing plants that will be set up for the purpose across the globe. This will reduce the cost significantly but the fit and finish of the car will be a question. We dont have to worry much on this since Magna has been doing already the same for international majors such as GM (Saab convertible), BMW (X3), DaimlerChrysler (G-Wagon, E-class-4WD, Chrysler 300C, Chrysler Voyager, Jeep Grand Cherokee, Jeep Commander). Tata’s one lakh car will be launched in places like Africa, Russia,China, Southeast Asia and in eastern Europe and Latin America. Tata may use its global partner Fiat for selling the car outside india where Tata’s don’t have their subsidiary. In short Tata will wish to sell the car wherever the income levels mirror India’s.
Component suppliers for the one lakh car:
Building a one lakh car isn’t a challenge just for Ratan Tata and his team, but also a formidable task for several small component makers who need to meet stringent cost and quality targets so that the car can be produced for Rs 1 lakh. Tata Motors demanded and got a whopping 20% discount on its rates for the Rs 1-lakh car($2500) from some of its biggest suppliers by betting on volume of the orders. Because of this, component suppliers have been forced to adapt a different strategy for the Tata’s one lakh car. They are innovating new products, setting up dedicated facilities and outsourcing their jobs to keep the production cost as low as possible. For auto components maker like Bosch, it’s an opportunity to work on products they developed over the years but could never sell because of the absence of a market globally. Bosch has tried a new technology for the exhausts by combining metal and plastic. It is expecting costs to come down significantly by using a blend. Bosch is also providing ignition technology for the one lakh car. Lumax Automotive which supplies headlamps is sourcing designs from Taiwan. Shriram Pistons & Rings, which is making engine parts for the car, is setting up a dedicated production line. It is learnt that Shriram is also working on in-house designs to cut costs. Many suppliers are setting up factories near the plant to reduce transport and packaging costs, which usually constitutes about 8-10 per cent of total manufacturing costs.
The NK Minda Group supplies parts such as switches and horns for the Rs 1 lakh small car. Sona steering is supplying steering columns for the tata’s one lakh car. Rico Auto supplies clutch for the car. Other prominent suppliers includes Gabriel Ltd, Kinetic Engineering and Teenco. Also among the suppliers for the tata’s one lakh car are a large number of Tata group companies, including Tata Bearings, Tata Toyo Radiator, Tata Johnson Controls, Tata Yazaki and Tata Ryerson, which ensures Tata a better control on time and time.
The good thing is this car help these suppliers evolve in terms of R&D which they often not used to, they are developing new products specifically for the one lakh car also they are getting a platform to showcase their skills, If the car sells in huge numbers, just like motorcycles did through the 1990s, it would be a windfall for India’s auto parts industry. The success of Tata Motors and all its component suppliers hinges on the number of cars that will hit the road.
Tata one lakh car peers — Renault-Nissan, Bajaj Auto, Hero Group, Xenitis, Maruthi and Reva:
# Maruti-Suzuki will completely reskin Maruti 800 (similar to what the company recently did with Zen-Estilo) next year. The company will rebrand it and even power it with a 600cc engine against the current 800cc.
# The Munjal family behind Hero Honda, india’s largest two wheeler maker, which is mulling a foray into the four-wheeler segment .is said to be in talks with BRP (Bombardier Recreational Products) for developing a 500cc small car to rival Tata’s one lakh car. Hero Group was reported to have been closely monitoring the Rs one lakh project by Tata Motors and learn from it to de-risk its own endeavour.
# Renault Nissan is the first one to come up with a idea to rival Tata’s car it plans to produce a car priced at below $3,000 (Rs 1.30 lakh) in India. As Renault’s local partner Mahindra is not interested in making such a low cost car, Renault- Nissan may settle with india’s robust two wheeler manufacturer. Incidentally Bajaj is also planning to foray into four wheeler through a smart car. More are chances for a new JV between Bajaj and Renault – Nissan to rival Tata’s one lakh car.
# India’s lone electric vehicle maker is believed to be developing a small car based on its Reva platform for the redhot Rs 1-lakh car market. Reva’s one lakh car would be a four-seater , four-door model and will be powered by heavy batteries than its existing line-up and the new car can reach a top speed of 100-120kph (80kph for the current Reva products) . Reva’s low cost car is expected by 2010. The current Reva range comes in three variants priced in the range of Rs 3.3-4 .3 lakh in India.
# Chinese manufacturers like chery which are scouting to enter the indian market may use this opportunity for their debut since they already products in this price range. These subcompact car segment may also attract new indian players like ICML and Xenitis.
# Global auto a JV of Xentis Group and China’s Guangzhou Automobile Industry based in bengal plans to introduce a “people’s car that would be in sync with the affordability factor”. Xenitis signed a Memorandum of Understanding (MoU) with GAIG to manufacture four-wheelers. The proposed xenitis small car is likely to go on sale by the end of October 2008. Global Auto has launched a motorcycle called Xpression early this year.
Manufacturers Word on Tata one lakh car:
# The auto manufacturers all over the world are preparing to counter the tata’s assault. Some manufactures have decided to follow the Tata’s footstep while others doubted the possibility of manufacturing a car at such a price very few like opts the both.
# Bajaj says a USD 3,000 car project is simply not a profitable proposition. “I would personally think it’s impossible. You know while there might be some people who say they are going to put out a car for a lakh of rupees or thereabouts or USD 3,000 for example, that’s always possible. It’s a manufacturer’s prerogative to give a product away for free if they want to. But I haven’t heard anybody say, explicitly atleast, that it will have a reasonable return like say 10%,” Rajiv Bajaj explained.
# Carlos Ghoshn CEO, Renault & Nissan said, “If we do it, I’m pretty confident. But if we come to a conclusion that we can make a USD 3,000 car but we can’t make money out of it, we are not going to do it”.“We are always focused on what our consumers want… if our consumer comes back and says here are the trade-offs, I am willing to make ($3,000 car) and this is what I will accept and live with,” Ford India managing director and president Arvind Mathew said. “At the moment, I am very curious to see how this car(tata’s one lakh car) looks like,” Mathew added.
# Hyundai India VP (marketing & sales) Arvind Saxena said: “It’s not just the price that a consumer is concerned with. Power, performance, space and fuel efficiency are all important factors that score with consumers.”
# Honda’s India chief M Takedagawa wonders about the one lakh project and said it would be a “three-wheeler with an extra tyre”.
Tata One lakh car’s Launch and the price:
The one lakh car will be launched before Tata Motors next AGM (Annual General Meeting) i.e in the 2nd half of 2008.
Maruthi believes that tata’s car will be around 1.25-1.5 lakh.many analyst support the view. but tata is confident and firm in their price tag. Some believe given the high expectations in the market, Tata will stick to its highly-touted Rs 100,000 price, at least initially, as a matter of pride. We could see a higher price after a month, two months, but at least at launch they will absorb the additional cost,” said Mohit Arora, director for India at J D Power Asia-Pacific.
But Tata’s are singing a different tune “I hope so. Just like people ate their words on Indica, they would realise that there is something (Rs 1-lakh car) that can be done,” Tata told on whether the launch would be an answer to the sceptics.
Who should worry and what they are doing to counter it?
* Two wheeler manufacturers especially the Bajaj Auto, the international consultancy firm JD Power had said that the Tatas’ people’s car would severely affect the top-end motorcycle segment in which Bajaj is the market leader with Pulsar. Analyst are expecting 40% drop in volumes in two wheeler sales after the launch of the one lakh car. But Bajaj is
confident about its products and it says top end bike users will not go for a low cost car also it plans to foray into four wheeler industry.
* The country’s largest car manufacturer Maruti-Suzuki MD Jagdish Khattar has said new launches in the sub- compact small car will reduce the price gap and affect two-wheeler companies more. He has the proof too Maruti Udyog Ltd’s (MUL) True Value initiative has already dented the domestic high-end motorcycle market. Under True Value, Maruti dealers sell used car certified by the company at a considerably lower price compared with a new one. Maruti sells around 75,000 used cars a year under this initiative.
* But things are going to be critical even for the Maruti’s true value initiative as the tata’s one lakh car may turn out to be a nightmare for used-car dealers. Second hand car buyers who spends between 1.5-2.5lakh may move easily for the new Tata’s one lakh car. Used car dealers say the launch of the tata’s one lakh car will cause a 40% drop in volumes in the pre-owned car. Used car dealers are planning to face the Tata’s assault through new ways – they plan to shift focus on more upmarket cars. Dealers are planning to step up warranty and guarantee schemes to attract buyers. some dealers are planning to tie up with banks for inventory funding and consumer loans at competitive rates.