Q: Are you nervous? Is this much bigger than the launch of Indica?
I think I was much more nervous during the launch of Indica because we had never been in car manufacturing before. We were venturing into a new segment. We are again venturing into a new segment but in a product line in which we have 10 years of experience now.
Q: What were the most challenging moments to your mind?
They all relate to costs. Perhaps the bigger, more visible issue is that somewhere we needed to benchmark ourselves against something. And we took the Maruti 800 as a benchmark. In terms of acceleration and driveability, it should at least equal the Maruti and in some areas it should exceed the Maruti.
So, somewhere along the line we had to increase the size of the engine to give us the kind of performance which we have now and the rest have been issues, you know, relating to costs. It meant just doing the same thing again and again to bring the cost down, and where to put the fuel tank and all those kind of is-sues.
Q: People are used to thinking within a certain framework. So how did you achieve breakthroughs in shaving off costs?
We haven’t changed when you see the car. It is a four-door car, five-seat, rear engine and in many ways conventionally constructed. What has been done is like (in the case of) door locks, we have the same lock on all four doors, both left hand and right hand. We have some parts that are wing locked from inside.
To remove the engine you can work at from the top, it is in the rear. Probably when you see the car, we have really packaged it rather tightly and I think most of the benefit we got on cost was that we used less steel and we just made the car smaller outside yet big inside.
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Q: You think that this car is going to some way change the DNA of the group?
That is not what it was conceived for. Well, the fact that you are doing it to address the market, that’s huge. It gives you an expectation of, you know, if we produce 50,000 of such cars then we are ready to undertake that exercise. From the time we are thinking that we could follow on with this, could be different fuels can be produced, an electric version of the car can be produced or hybrid version of this car or can we make this car the platform for a new set of personal transport.
The one thing that I think we have established is that we have created an affordable, personal form of transport. Some may like it, some may not. Some may think it has things that it shouldn’t have, while some may think it is coarser than it should be. But we have an affordable form of transport that will take four or five people in all weather conditions to where they want to go, running on regular fuel and not some exotic fuel.
Q: There has been some criticism that this car is going to choke the already congested roads in cities. Do you think that is an elitist criticism?
Yeah, I asked myself. We produced about 7 million two wheelers earlier. Today, we almost have about 60-70 million two to three wheelers in the country. We produced about 1.4 million cars and at some point we will exceed 2 million. Nobody said anything about that. It only happens to be this car that is being targeted. You may say well OK the two wheeler takes lesser space.
Our car pollutes if not less, then certainly not more than a two wheeler and I am not talking per passenger but as a vehicle. We conform to Euro IV in terms of our engine. Today Bharat III is required, we conform to Bharat III. All scooters and two wheelers are Bharat II today, not that they are not conforming, but that’s what their standard is. So, all I want to say is that yes you may take a view that this small car will take less space than a large car.
Yes, you may say that this car will carry four people instead of the normal two on a scooter and therefore you will have if, filled in with four people, you will have less on the road than two scooters. More of immediate concern, for anyone that drives a car, is that today two or three wheelers have become a little more of a menace on the road than a car has become because of their ability to weave in and out.
And it makes an assumption that a small car will not replace a bigger car. It just looks at it as an increment. You produce two million cars, you produce half-a-million Tata cars, you produce 2.5 million cars. That’s not quite the way it is going to work. We will cannibalise some of the existing low-end cars or cannibalise some of the existing two wheelers. Some of the cannibalisation will be of our own product and Indica is also going to feel the effects of this. So, it will not be that it will just sit on top of everything and there won’t be a square inch of space on the road or anything of this nature.
Secondly, we are looking at congestion in major cities. Have we drafted a form of affordable form of family transport for people in tier II or tier III cities. Is it their lot not to have it? Is it a sin to try to give it to them? Does it necessarily mean that the small car is only congesting the city roads in the major cities and that nothing is being done in the urban areas. Yes, we have high teledensity in the urban areas, we haven’t done enough in the rural areas, but there is huge potential if rural India gets connected and the same is going to be true with transport.
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Q: Who are your potential customers for this car? Are you really looking at tier II and tier III towns and cities?
I think I would rather not look at it geographically. I would say: who might be the buyer of this small car? Let’s start at the top. If I were to look in the United States or in Europe, in some of the garages you would have a Bentley or two Bentleys’ or a high-end Mercedes, and you may find a Smart also in that same garage because that person thinks it’s a fun extra car to have. He may have four cars, but also have a Smart because he thinks it is cute. Doesn’t need it, but he may have it.
Then you may have a person who needs a utilitarian form of transport. He is not looking for a lot of creature comforts; he wants to get around in a sensible way. Then you think of a person who is perhaps thinking of or owns an existing small car. And to him it makes sense to get it because it is more fuel efficient or its lower cost or whatever it may be. And then on the other side you have someone who aspires for a car which is beyond his reach. He doesn’t have a car or he has a two wheeler or a three wheeler and this fills his needs. And then, this can come from anywhere in the country.
Q: Would you also have a lot of people emulating your example in the sense of wanting to build a $ 3000 car?
I think, my friend Carlos Ghosn has been the only person in the automotive area who has not scoffed at this. He has from day one said that this is a possibility that could only be done in a place like India. And he has not ridiculed anything. From day one he just said that it is possible in a place like India, but not possible anywhere else.
Q: When other car makers enter the same space, how do you reckon the belly of the market will get segmented?
I think the best way to answer that is to again go back in time. Maruti was the only manufacturer in the low-end car space. At that time, I felt that it needed to be challenged so we started on the small car in that space. I knew at that time the European manufacturers and the other Japanese manufacturers would never be able to produce a comfortable car. The Koreans could, and they did.
By the time the Indica came out, so did Santro, so did Matiz. And they came out all about the same time. Theoretically, I thought I was the only one. May be they thought they were too. But then we realised that we were all coming out at the same time, and we had three offerings of the new price dimension and a more modern car than the Maruti. That probably added considerably to the growth of the car industry and it probably should have had the same reaction as this one is because it is exactly the same thing.
Maruti was producing about 150,000 cars at that time. The 800 was the only one and I think by the time the Esteem had come, 180,000 cars or may be 200,000 cars were being produced. A few years later, Indica was itself over 200,000 cars per year. So the same kind of paradigm change that took place at that time could happen within just the small cars. So, if Bajaj and Mahindras and whoever produce small cars, then 3 or 4 brands of small cars will be available to choose from. I don’t believe that Tata Motors can fulfill the entire demand of the country.
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