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|Tata´s Nano car and India´s arrival|
Asahi Shimbun - January 19th 2008
Lakes full of ink have been spilled about the unveiling in
Yet almost all the commentary has missed what is surely the most significant point about Tata Motors’ new car. This is that it marks the arrival of
Since the turn of the century, analysis of the economic rise of
What the Tata Nano shows, however, is that this is out of date. It is history.
But that is now changing. Roads are at last being built. Sea-ports have been modernised, using private management and investment. Airports are being privatised and rebuilt. Domestic consumption, and so local demand for manufactures, is growing rapidly. As a result, Indian manufacturing output has been growing faster than services in each of the past two years. Services, especially information technology and outsourcing, remain strong, although rising wages for technology graduates have reduced profit margins. The biggest opportunities now lie in manufacturing.
The car industry will be at the heart of Indian manufacturing growth during the next decade. Global auto firms are investing there: last week, Ford announced a $500m investment in car-making in
Tata Motors is top of that list. The design and manufacturing achievement represented by the Tata Nano should not be underestimated. The project resulted in 34 patent applications, including notably one for the light-aluminium 624cc engine. Tata says that 500 designers and engineers have spent the past four years developing the car. The fact that they did so apparently without sacrificing safety standards or even exploiting currently low Indian emissions rules suggests that it is the result of genuinely innovative design and process-engineering.
The Tata Nano will be half the price of its closest existing rival in the Indian market, which is made by a joint venture between Maruti of India and Suzuki of Japan. Like the Ford Model T and the Fiat 500, the Tata Nano will make sense only if it is produced in very large quantities, as a mass-market car, which will also mean that Tata will need to export in order to build up its scale of production. Tata is already talking about an eventual annual production of one million cars per year. That may be premature. But the potential is certainly there, given the growth in demand for cars in many fast-growing emerging markets, in Africa, Asia and
At the same time, Tata Motors is negotiating to buy two luxury car brands: Land Rover and Jaguar, both of which are famous British names currently owned by Ford. So, all of a sudden, the world will have a new car-maker, competing in all segments of the market, from ultra-cheap to luxury. That will also stimulate Indian and foreign investment in
Much of the time, 2008 will feel as if it is the year of