Will the World’s Cheapest Car Curry Favor?

What should have been a modest piece of commercial news out of the 2008 New Delhi Auto Show has seized the world’s imagination. Tata Group, the Indian industrial conglomerate, whose Tata Motors is the world’s 18^th largest automobile company, unveiled a new “People’s Car”: the Nano.

Given the reception the Nano has received, one would think that it is a new weapon of mass destruction. In fact it is a very small, slow, basic four-seater, designed to operate in Indian cities at speeds of not more than 50 mph. The bombshell is the price: $2,500, according to Tata.

This is great price, but it is not much of a car. Tata seems to know this because it has been frugal with information; releasing a list of specs, but not allowing automotive journalists to even sit in the car. What we know is that the Nano has two cylinders and develops between 30 and 40 hp. This is basic transportation. Very basic.

Tata’s hope is not that the Nano will elbow Ford Neons out of the market, depress the sale of Toyota Camrys, or hobble the market for its own conventional range of cars. No, this car is several orders of magnitude less of a vehicle than anything now being sold on the world automobile market.

You would have to go back to the 1930s to find something with the same range of performance and economy as the Nano. I would suggest that you look at the Jowett Bradford light van, made in the English city of Bradford from the 1940s to the 1950s. It boasted a two-cylinder, horizontally-opposed, water-cooled engine, and probably developed about 35 hp. It was rated at 8 hp under the British system of measuring horsepower at idle. What the Bradford lacked was hydraulic brakes and a synchronized gear box. Even so, it met many of the targets of the Nano. Of course, it was not a sedan but they were easily converted.

The People’s Car has intrigued automobile manufacturers throughout their history. While the term goes back to 1938 and the design of the Volkswagen Beetle, it could be claimed that the first People’s Car was the Ford Model T.

Aspirants to the title of the People’s Car, besides the most successful of all, the Beetle, include the French Citroen Deux Chevaux and the English Morris Minor. But only the Beetle saw global distribution and really earned the title.

For a People’s Car to work, it not only requires a price point that will tempt people who have never owned cars to buy, but it also requires a classlessness that makes the rich and the poor alike comfortable behind the wheel. There are a few things in society that are classless: blue jeans, sneakers, and hamburgers come to mind. The Beetle, the Morris Minor, and the Honda Civic triumphed in this regard.

There is a good place for a classless car in the world. It would have to be inexpensive, fuel-efficient and safe—and ideally a hybrid. This is not the Nano. It is not even clear that Indian families will buy the Nano because it meets so few of today’s motoring criteria besides fuel efficiency. It has very little space for luggage; it would be murderous on a long trip; and despite protestations from Tata, it would not meet most Western safety standards.

There is also considerable doubt whether Tata can hold its declared price for the car. This has been achieved by skimping on features, using cheap labor, and receiving massive subsidies from the state of West Bengal.

Don’t know much about West Bengal? It is India’s most densely populated state; its major city is Kolkata, formerly Calcutta; and it has had a Marxist government since the British left India in 1947. Like all Marxist governments, it has been economically ruinous. Its subsidy to Tata to build the Nano is a blatant attempt to paper over the economic stagnation of the state. It is unlikely that the subsidies will last or that Tata can build a car, with or without, subsidies for $2,500. Automotive economists believe that the real price of the Nano will be about three times the introductory price.

Despite the huge publicity that the Nano has received, it probably will revolutionize the world automobile industry. Remember the Proton? Of course not, but it is a Malaysian car that has been trying to revolutionize the world automobile industry since 1985.