[sustran] Fwd: Dinesh Mohan: The Nano confusion

Paul Barter peebeebarter at gmail.com
Wed Oct 15 17:47:25 JST 2008


This is relevant for sustran-discuss too, so forwarding from another forum.

Paul
http://reinventingtransport.blogspot.com/

---------- Forwarded message ----------
From: Eric Britton <eric.britton at ecoplan.org>
Date: 2008/10/14
Subject: WorldTransport Forum Dinesh Mohan: The Nano confusion
To: WorldTransport at yahoogroups.com, the-commons at yahoogroups.com


Thanks to Lee Schipper for the heads-up.


*Dinesh Mohan: The Nano confusion*

Dinesh Mohan / New Delhi January 20, 2008
http://www.business-standard.com/india/storypage.php?autono=311142


A car is not just a more expensive two-wheeler, which is why the low price
of the Tatas' latest car may not spur more buying.

When Ratan Tata announced his ambition of producing the one-lakh car, I very
wisely informed my friends that such a cheap car would not be able to meet
the European offset frontal impact standard. This standard requires a car to
hit a barrier head-on so that 60 per cent of its front takes the impact at
56 km/h (Standard ECE R-94). My reasoning was that if the Smart (one of the
smallest cars in Europe) sells for more than Rs 4 lakh in Europe, then how
can we produce a safe car at such a low price? On March 10, however, Tata
unveiled the Nano and announced that it will meet the European frontal
impact standard, proving many of us wrong!

In his speech, Tata also assured that "Dr Pachauri need not have
nightmares," (in reference to pollution) as the car would meet all Indian
emission norms and eventually the latest European norms. However, the debate
continues with some going overboard to declare the launch of this car as a
transportation revolution, an event as significant as the launch of the
Model T by Henry Ford, and even a happening that may destroy the brahminical
order in the country!

Others are worried that congestion will increase manifold and push up
pollution to unbearable limits. Yet, demands have already been made that it
would be unfair to the launch of the Nano if the government does not widen
roads and build more expressways immediately at the expense of the general
public.

It is worth examining the possibilities as the dust settles after the hype.
The first issue is whether the Nano will put a car in every family's front
yard. We seem to forget that Rs 1-lakh cars (and cheaper ones) have been
available for some time in India. They are called used cars. These days you
can get an air conditioned car in reasonably good shape for less than Rs 1
lakh. Yet, motorcycle users have not shifted to using cars in droves. The
reasons are quite logical.

The monthly cost of running a car includes your monthly loan payments, cost
of petrol, insurance, periodic servicing, maintenance and repairs of dents
and damages. When the Nano is sold after about a year, its price after
inflation and taxes is likely to be around Rs 1.5 lakh. The typical monthly
payment for a loan of this amount is about Rs 2,700 and that for a Rs 2-lakh
Maruti about Rs 3,400. For an active young person, petrol is about Rs 3,000
a month, insurance and other expenses a minimum of Rs 1,000 a month. So, a
total of Rs 6,700 a month for the Nano and Rs 7,400 a month for the Maruti.
An actual saving of about 10 per cent per month which is not enormous.

 A middle class family generally cannot spend more than 15 per cent of its
income on transport. To spend about Rs 6,000 a month on the Nano, your
income should be more than Rs 40,000 a month. In Delhi, the richest city of
India, only 30 per cent families earn more than about Rs 25,000 a month.
Clearly, even with cheap cars available, less than 20 per cent of the
families can own a car on Delhi and much fewer in other cities. That is why
the motorcycle with its low maintenance and running costs will not get
displaced by cheap cars.

The motorcycle, in spite of being a hazardous mode of transport, is still
attractive for young people because of the ease of parking and
manoeuvrability in transport, including getting to the front of the line at
the traffic light. A middle class family in large cities lives in a small
flat where there is little space for parking and a junior person does not
get parking at the work place either. So, I do not expect too many
motorcyclists to shift to the Nano. Ultimately, Nano's success will be
decided on how it performs on the road, noise levels, rattles and after
sales service, and comfort levels at 80 km/h when a truck overtakes you.

Congestion is not influenced by the number of models sold. The total numbers
of cars already available is enough to ensure endemic congestion on roads.
Car ownership in Delhi at present is less than one fifth London's, and both
cities have a similar amount of road space available! The American
experience is ample proof that no amount of road widening or use of
electronic technology reduces congestion. The latest report from the Texas
Transportation Institute shows that in the past 25 years, congestion has
increased in every single urban area in the US in spite of all investments
in transit and road construction.

This filling up of the roads decides the amount of pollution. Therefore,
pollution in a city will firstly depend on the amount of area a city devotes
to roads and then the kind of vehicles that will ply on those roads. Once
the road surface area is decided, we have to minimise the pollution from
each vehicle present there. On that account, if the Nano complies with the
latest emission norms and has a small engine, it will pollute less than the
bigger cars on the road.

 So it is not Pachauri or Sunita Narain, but the executives of Maruti Suzuki
who are likely to get a massive headache. If Tata is a car manufacturer, we
cannot expect him not to make more cars. We can only expect him to give us
cleaner and safer cars. For that, we have to complement Girish Wagh and his
team for leading a successful team and producing the Nano. Such successes
give a great deal of pride to young professionals and hope for their future.
Without pride in innovations and inventions, no society can really create a
future for itself. But the issue remains, what kind of a future do we want
and who do we include in it?

 If some of us think that cars are not good for clean air, then our
policymakers have to create conditions that make it unprofitable for Tata to
produce such cars. This can only be done by putting an end to direct and
indirect subsidies for car owners. By placing severe emission norms for
cars, charging the real estate price for parking, instituting annual
registration fees that pay for road building and maintenance, and charging a
pollution and CO2 cess in proportion to emissions. Are we willing to do
this?

 If the term "people" includes more than 70 per cent of the population, then
there can be no "people's car" in India. But, we can have transport for
people. Tata has been accused of not worrying about public transport. He can
prove all of us wrong again by producing the cheapest air-conditioned
low-floor urban bus in the world for Rs 20 lakh!


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