Welcome to civilization

In the office.
And on the beach

The web magazine for top managers - who's promoted, who came, who left? And what to do when you're not in the office.

India has 25 percent of Earth population, give or take few millions. It is huge country with opportunity for huge economic growth, not just in outsourcing, its trademark business. This huge country means lots of possibilities for all, and among western companies probably the most eager to enter that market is automobile industry. After all, we all need to drive a care, don't we?

tata car india plastic auto cheap

Unfortunately, the roads in India are, generally speaking, in such bad condition that "it is a sin to drive a new care on this street", as one foreigner put it. So, what is the recipe? It is expensive to build a road (many, many miles of roads, to be more precise), and it seemed that western automobile giants have no answer to such unsolvable situation. Without roads there's no selling. And still, such a huge country is untapped market.

While the western were thinking, the Indian company Tata decided to solve the puzzle buy designing the world's cheapest car, to be on the market sometime next year.

In India, owning a car is status symbol. When we take into account all those people that can, or could, afford them a car, we are talking here about tens of millions of customers. Those millions are Tata's targets. The new cheap car will cost less than half the price of cheapest car today - a bit over $3000. The car has no name yet, but we'll call it 1 Lakh Car for now. The new king of cheap will have four doors, size of Volkswagen golf, the engine will be 30-horsepower engine (Volkswagen has 150hp, but who cares?), and it will built mostly using - plastics. (Ratan Tata, the first man of Tata Group denies that, but we'll see...)

tata car india plastic auto cheap

The Tata's profit margin will be less than 3 percent, so the volume of sales must be huge to compensate. And that shouldn't be hard to achieve considering few facts so strange to our western minds. In Indian state Kerala there is a jumbo billboard advertising a new car, with slogan: "Welcome to civilization". On the other hand, Indians love "mechanic plus gas" combination so passionately. It is not unusual to see a whole family on one motorbike, or to save for years to buy a new car. See, the new is the word here. And it has strong background: While in the USA 770 Americans out of 1000 has a car, in India it is 8 per 1000.

Tata's new plastic car will mean even more wheels, horns and thin driver's nerves on overcrowded streets of India. The government of India should build new roads. When choosing between some more important stuff and a car, the car will be the winner. Those who have a bike, or motorbike, will get a new Tata. But all that doesn't matter. The people of fast developing nation have a passion for a brand new automobile. And that is good; dreams are here to be lived.

August 22, 2007

Post to: