Raze 1,000-acres of farmland to build an automobile factory, and somebody is going to protest. Even in India. The automaker is Tata, and the protesters numbered at least 1,000 strong as they went head-to-head against police in eastern India yesterday at the future manufacturing site of the Tata Nano (rumored to be the world's cheapest car at just $2,380). The protests are rooted deeper than just "open space" issues. In fact, the real tension is between India's ruling party, and the communist-run government in West Bengal where the plant is to be located. The farmers are unwilling to part with their agricultural livelihood, while the government continues to promote industry. After blocking a highway for a few hours, the stick-wielding protesters were dispersed without injuries. Once again, progress wins out over pastures.
Tata's diminutive Nano will soon be hitting the market with a standard 30-horsepower, 624cc gas engine mated to a four-speed manual transmission. While that may seem a bit small and underpowered, those looking to spend just $2,500 on a brand new car aren't likely to complain. Plus, the combo is good for 54 US miles per gallon, quite the achievement, we'd say. When it was first introduced, Chairman Ratan Tata indicated that a diesel engine was likely soon after launch, and it seems he wasn't kidding around. Displacing 800 cubic centimeters and equipped with common-rail fuel injection along with a turbocharger, the planned twin cylinder diesel engine has been jointly developed by German powertrain specialists FEV, Bosch and Honeywell. So far, no pricing, horsepower or fuel mileage statistics have been released, but the oil-burner is sure to improve fuel mileage even further and will likely add a bit to the cost of the World's cheapest car.
Fiat and Tata already have a joint venture to distribute commercial vehicles. If they can do the big stuff, why not the little stuff? Tata and Fiat are looking at an agreement to sell the Tata Nano outside of India in markets where Fiat has a strong presence.
If the deal goes through, and once the car is upgraded to meet Western standards, Tata can take advantage of the Fiat name, marketing, and dealer network. Fiat would probably have a big seller on its hands -- and a slice of every one -- since the car is still expected to maintain a healthy price advantage even after it gets beefed up.
The Tata, however, is not expected to come to the U.S. as a Fiat. Ratan Tata said, ""We have held talks about the Nano being marketed in markets where Fiat has already a strong presence." Frankly, America isn't one of those places yet. With Tata making such a big splash over here with Jaguar, they probably wouldn't need Fiat to help the brand. Still, the thought of a Fiat 500 and a Nano snuggling in the corner of a dealership would be too cute to miss.
The Tata Nano exudes frugality, and when you're trying to build a capable vehicle for a paltry $2,500, that's not exactly unexpected. Unfortunately for the Indian automaker, the quickly rising cost of steel may thwart plans to hit the magic price-point. The price of steel has risen by 50 percent in less than a year, and even though the little Nano is only 1,300 lbs, when you're making an econobox on the mega-cheap, every penny counts. Like US automakers have done in the past, Tata is looking to its suppliers to shoulder some of the financial burden. Amazingly, the suppliers are okay with that, provided that Tata does its share.
Even with concessions from suppliers, it's still up in the air as to whether Tata will achieve its lofty target. It appears using a nice round price as a selling point for a vehicle that's a year away wasn't such a good idea after all.
It's nothing new to have automakers pushing suppliers to cut their component costs. For the past decade and a half, many companies have demanded suppliers provide price reductions of 3 to 5 percent a year, every year, with varying degrees of success. India's Tata Motors is taking these efforts to a whole new level. In order for Tata to build a new car with a retail price of only $2,500 they need component prices an order of magnitude cheaper than other cars. One example is airbags. While Tata wants the Nano to be a very basic car, it wants it to still meet safety standards. The problem is that frontal airbags cost about $150 each. At that level, a pair of airbags would account for more than 10 percent of the cost of the car, clearly a non-starter. As a result, Tata has asked occupant safety systems supplier Autoliv to develop airbags that cost only $10 each. How or if Autoliv will get down to that price point remains unclear. It seems that features like two-stage airbags and systems that detect the presence of a passenger to disable the bag if there is no one there will have to be left out. In any case, it'll be interesting to see if Autoliv and Tata can pull this one off.
Fiat hasn't ruled out the possibility of launching a new low-cost brand, according to the latest reports. The new brand – which could, like Abarth, revive one of the many dormant auto marques under the Fiat auto umbrella – would target arch-rival Renault's Dacia subsidiary in offering consumers (primarily in developing markets) cost-effective modes of transportation, in line with the Tata Nano. Those in the know will point out that Tata and Fiat have close ties, and the Indian automaker could be called to contribute to the project.
Although Fiat recently acquired Zastava, reports indicate that the Serbian plant will be used for the upcoming Fiat Topolino and not for any new lost-cost vehicle. The latter could, instead, be built by Fiat's subsidiary in Brazil, where the Italian automaker already produces vehicles and enjoys a strong market share. Sources suggest the new vehicle, code-named Project 327, could go on sale in Europe as early as 2011 with a €6000 sticker price.
Up until today, there were no major automobile manufacturers taking part in the Progressive Insurance Automotive X Prize. That changes with Tata Motors signing a letter of intent to compete in both the Alternative and Mainstream classes. The Alternative Class allows for the use of fewer than four wheels, though Tata's intention is "to enter a pure e-drive micro car" in that class. The more relevant Mainstream Class requires four wheels, a two-hundred mile range and the equivalent of at least 100 miles per gallon from a package capable of carrying four passengers. For this class, Tata indicates that it will enter a Dominant Electric Hybrid vehicle. We're rather anxious to see what Tata is able to cook up for this eco-friendly competition, considering that whatever engineering goes into the development of its X Prize challengers can easily be applied to the production Nano, as well as Jaguar and Land Rover vehicles.
Indian carmaker Tata chose a site in Singur, India for the plant that would make the Nano, the world's cheapest car. Not long afterward, eleven petitions were filed in the Calcutta High Court stating that the purchase of the land for the factory violated the Land Acquisition Act of 1894. It was alleged that the government of Bengal forcibly took "fertile multi-crop agricultural land" from farmers for industrial use, which isn't allowed.
Earlier this year, the Calcutta High Court found in favor of the government of West Bengal (where Singur is) and Tata. Now another petition has been filed with India's Supreme Court over the issue, and the Supreme Court has asked the West Bengal government and Tata to respond.
The issue for the moment is that the Nano is supposed to go on sale in October -- but the next hearing over the land use petition won't be held until July. Some suppose a revised land deal might drive up the price of the car. Regardless, if Tata doesn't work out a production alternative, Tata won't get the head start it was hoping for on what could be a huge market.
It was rumored that Nissan/Renault was serious about fielding a low-priced competitor to the $2,500 USD Tata Nano, and the automaker made it official today by announcing a plan to produce an equally inexpensive car called the ULC in conjunction with Indian automaker Bajaj Auto. The two companies are forming a joint-venture to produce the ULC, which will be built at an all-new facility in Chakan, India at an initial rate of 400,000 units per year. The Tata Nano has no need for concern just yet, as the ULC isn't scheduled to go on sale until early 2011 in India and then even later in export countries. We're doubtful that the U.S. is among those export considerations, but parts of Europe will likely see the ULC not long after the Nano arrives in their market.
Countries like China and India are a hotbed for the auto industry, and every major automaker is looking to improve its standing in the emerging markets while they're still on the ground floor. Low-cost micro cars are all the rage in the East, and Nissan/Renault is looking into getting a piece of that action by producing a Nano fighter. Nissan Motor India Director Neeraj Garg told The Times of India that while higher priced sedans and SUVs are also scheduled for India's booming auto market, a low-priced hatch is also on the wishlist if the pricing is right.
Company officials say that the low-cost transportation could be among six new products scheduled for India by 2012, and with the country's low-cost labor, Nissan/Renault could also export any vehicles it makes there.
