Does it really take three auto majors to come up with a one lakh rupee car? Does it really take three auto majors to compete with Tata Nano? Looks like it. Nissan Bajaj and Renault have come together to build an ultra low cost (ULC) car which would cost around US $2500. When it comes this car would fill in the missing piece in the Indian car market – a competitor for Tata Nano.
The Indian car market is fragmented and looks to become even more so. Only two years back the fragmentation or the segmentation was at the lakh level. That is you could find cars priced between the 4-5 lakh segment. Now we can almost find cars in the thousands level. Many of the car manufacturers are competing with their own segments.
Maruti Suzuki has launched A-Star, Ritz and new WagonR which are priced with difference of a few thousand rupees. Ford which has had only sedan and SUV’s so far, has jumped into the hatchback car segment with its Ford Figo. Ford received 15000 bookings in the month of April for Figo. Volkswagen too didn’t want to miss the mid-segment pie and launched its Polo.
In this increasingly fragmented car market the only segment which doesn’t have a real competition is the ultra low cost segment. With Maruti 800 retired, the cheapest car available on the road is Tata Nano. It really doesn’t have any competition.
Not just that competing with Nano in pricing is not something which can be easily accomplished. It is even difficult to estimate if Tata made any profit out of Nano, considering all the problems it has faced during manufacturing.
Though the Figo’s and Polo’s cost much more than Nano, I can find more Figo’s than Nano’s. Which means there is demand for cars and all types of them. And demand is outstripping supply as not many Nanos are seen on the road or is there something else?
Nissan-Bajaj-Renault will bring out their ULC in 2012. If it took three auto majors to come up with a Nano competitor. I don’t see anyone else coming up with a ULC anytime soon. The bigger question is how safe would this ULC be? Few Tata Nano’s had caught fire while being driven to the dealer or to be delivered. The real reason of the fires is not yet known. Though some professed that poor maintenance could be the reason. That argument falls flat on its heels as there is no question of maintenance for a new car. Strangely there is no recall.
Tata Nano has done something remarkable with its pricing. That is not a license to produce cars which catch fire. Nissan-Bajaj-Renault’s ULC should have this as their selling point in addition to the cost. Just like Havells Nissan-Bajaj-Renault should come up with a new marketing campaign for their ULC. “Cars that doesn’t catch fire”.