Voltas is a Tata company

The largest and most popular company in India is planning a $ 2,000 car for the millions of people in the lower middle class. Dream or nightmare?

Highways are still a rarity in India, but there are bad and narrow roads in abundance. Every driver therefore spends a lot of time behind trucks. Fortunately, they are cooperative when you want to overtake - the instructions for this are painted on the back of the loading platform of every Indian truck. It starts with "Horn Please" and ends with "OK Ta-Ta". Before you start to overtake after honking the horn, the truck driver signals the clear path with a roaring “Ta-Ta”, the Anglo-Indian version of “Bye-bye”.

Now the company that produces 65 percent of Indian trucks is called Tata Motors, and of course the Tata brand is also painted in large letters on the rear loading platform. And because Indian motorists spend so much time behind trucks, the big car company has turned the “Ta-Ta” into a “Tata”. The slogan on the newer trucks ends with “OK Tata” - the catchiest advertising slogan you can think of.

However, it would be unfair to blame the Tata brand's high memorability on the poor Indian roads and driving in a convoy. The name is so well known in India because it is the largest and most popular company in the country. A promotional film by the Tata Sons holding company once illustrated the importance of the conglomerate based on the daily routine of a modern urban Indian: He is woken up by an alarm clock (Tata Titan). He's drinking his morning tea (Tata Tea), and the salt on his three-minute egg is from Tata Chemicals. He gets into his Tata Indigo and drives into the office.

Like the steel in the car sheet, the metal parts in the office building are from Tata Steel. He hires his air cooling unit from Voltas, the Tata company that took over production from the Swiss company Volkart almost forty years ago. He makes his phone calls on a Tata Indicomm set over the Tata VSNL network, and if he works in Mumbai or Delhi, the power comes from Tata Energy. On the way home he has another coffee from Tata Coffee, perhaps in a Taj hotel, one of the largest hotel groups in the country. Tata Steel, Titan Watches, Tata Motors, Voltas, VSNL are also among the largest in their industries in India, Tata Tea among the largest in the world.

Tata's market power is enormous, but the consumers who feel threatened by it can be counted on one hand. With a total turnover of $ 22 billion, the Tata Group is one of the heavyweights of the Indian economy, and the owners are broad - but for most Indians the company is still a family company run by a Tata offspring.

Ratan Naval Tata, chairman of the whole group and president of Tata Motors, was at the Geneva Motor Show in spring 2003. At the press conference, he briefly mentioned his goal one day of bringing a car onto the market that would be so cheap that lower-middle-class Indians could also afford their own car. A journalist asked him how expensive he imagined such a small car. "About 100,000 rupees, about $ 2,000," Tata said after pondering. The next day, a text from Reuters ran over the ticker with the headline: "Tata is planning a car for $ 2,000." The vague dream had turned into hot news.

Instead of being angry about the half-truth, Tata continued to stretch the thread. He admitted it would be difficult because the cheapest small car in India, the legendary Maruti 800, cost twice as much. But wouldn't it also be a one-time challenge that would focus the energy of the entire Tata Motors group on one goal? And wouldn't it be a PR coup? The whole of India would be eagerly awaiting whether the old warhorse would succeed in accomplishing the impossible.

What Ratan Tata says is taken seriously in India. Shortly after he took up his job, he gave the lie to those who claimed he owed his calling primarily to his distant relatives with Company Patriarch J.R.D. Tata. Although his temperament was rather cautious, he made a nail for it. With the slogan “Turning around the Titanic”, he cleared the thicket of over 130 companies and kept the subsidiaries on a leash. He defined seven strategic areas - IT, machines, materials, services, energy, consumer products, chemicals - and sold around forty companies.

He also announced that Tata Motors, previously synonymous with locomotives and trucks, would be the first Indian company to develop its own car. The public reacted skeptically, as Tata had only brought a few SUV-like cars onto the market that were built on the platform of the pickups and were outdated and prone to failure. But Tata's indica was a huge hit. Before it rolled out of the factory gates in Pune, Tata Motors had sold 125,000 for full payment. The indica turned into an “OK Tata” experience. Ratan Tata had cleverly coupled the national optimism of the 1990s with the image of the respected company flagship.

So the skeptics were warned when Ratan Tata began to speak of a “one lakh car” - lakh stands for 100,000 rupees. With the Indica, he had followed his intuition that the new middle class would buy an Indian car when it reached global manufacturing standards. With the mini car, his instinct tells him that the rapid economic development has also aroused social aspirations, especially in the lower middle class, which cannot make the leap from a two-wheeler to a Maruti 800 because it is simply too big.

But it's not just about social status for him. When asked about the ideal customer profile for the new car, Debasis Roy, spokesman for Tata Motors in Mumbai, silently opens the morning paper and points to a photo of a young family on a scooter, the woman in the accompanying seat, the little girl standing in front between the knees of the father. It's monsoon season, spray splashes up, the three of them are completely soaked and hold their heads stiff in the lashing rain. “These are our customers,” says Roy. “Doesn't this family also have the right to be left in the dry? Is it right if the child goes to school with wet clothes? "

"India today has 65 million owners of two-wheeled vehicles," says transport expert Abdul Majeed. “8 million new ones are added every year. If only a quarter makes the move to the small car, then that is 2 million new customers for Tata Motors every year - not to mention the possibilities of exporting to Africa and Latin America! "

Ratan Tata uses the most recent catchphrase of development economists to say the same thing: “We have to offer our products to customers from the broad base of the income pyramid. In India, that's a billion people market. " The image of the pyramid comes from the Indian-American economist C. K. Prahalad, who coined the acronym "BOP" - Bottom of the Pyramid. His thesis: If consumer goods producers manage to package their products in such a way that the poor can also afford them, then suddenly a market opens up with billions of new customers. Prahalad demonstrated it using the example of shampoo. A poor woman cannot afford a shampoo bottle if it costs twice her daily income. But from time to time she can afford a bag that is twenty times cheaper.

For Tata, however, the challenge is much greater this time than for Indica. Right from the start, he set himself a price target that other car manufacturers consider simply unattainable. Anand Mahindra, the head of the car company of the same name, which manufactures Jeeps and recently also the Logan in a joint venture with Renault / Nissan, blasphemed that he too sells cars at this price - but they are used cars. Carlos Ghosn, the Nissan boss and notoriously notorious as a cost suppressor, dreams of a small car made in India - but at one and a half times the price. Jagdish Khattar, the boss of Maruti-Suzuki, India's largest automobile company, simply says that his company will not manufacture any competing product, after all, it wants to make money.

The reaction of the Maruti boss reveals envy and nervousness. For 23 years the Maruti 800 had been India's cheapest and best-selling car, and now one is on the market that is said to cost half as much. But Khattar is also right. Inflation alone made the 2003 rupee 100,000 worth Rs 125,000 today. Then there are the increased material and energy costs. In addition, wages for skilled workers have skyrocketed since every automaker in the world is soon building small cars in India.

The secrecy surrounding the “One Lakh Car” has given rise to speculation about the technologies and materials Tata will use to create the impossible. Composites instead of steel? An electric motor? Liquefied petroleum gas, or even the pneumatic motor of the French inventor Guy Nègre, to which Ratan Tata has secured the Indian rights? Everything is much easier, countered the auto trade press: if the Tatas want to be successful, they have to use the existing fuel supply in the country, which means that the car will have a conventional gasoline or diesel engine.

Today every car factory is a manufacturing plant where 80 percent of the parts come from suppliers. Your prices are crucial to the final price. The Tata suppliers are subject to confidentiality and do not reveal any details. But they moan about the vice in which she has clamped Tata. A supplier from Delhi tells of a meeting of 200 component manufacturers with Ravi Kant, CEO of Tata Motors. He said he gave them a Capuchin sermon so that they could lower their prices to a tiny margin. Kant had persuaded her that the car was an “idea that grabbed the whole country,” a “national dream” that had to be made true. He lured with the carrot of the huge numbers that waved. Tata plans to produce 250,000 vehicles in the first year and increase this number to one million within five years. The first plant is being built in West Bengal, and production is scheduled to start in the middle of next year.

But suppliers are wondering whether the price pressure will not also reduce quality. With such a cheap car, can international safety standards be guaranteed as Tata has promised? India already has 85,000 road deaths, the highest number after China. And what about the emission standards when they call for more expensive engines and exhaust systems?

India's miserable infrastructure and the effect that millions of new cars will have on air quality are making Tata executives sweat. At the meeting with the suppliers, Tata CEO Ravi Kant reacted irritably to such objections: “I build cars. It is up to the state to build roads. " And anyway: «How can we deny the millions of two-wheelers the legitimate desire for a car, especially if we are four-wheelers ourselves? Or did you come here by bus today? "

India's share of global CO2 emissions is small when measured per capita. At 1 tonne per person, it is twenty times lower than in the USA. But with a population of 1.1 billion people, that adds up to 1.1 billion tons - the fourth most potent trace of poison in the atmosphere. Auto production in India is growing by 20 percent per year and will reach 2 million vehicles in 2010. With commercial vehicles it will be 3 million a year. If the production of the Tata small car at its four production sites is ramped up to one million, massive traffic collapses in the cities are threatened.

At least that is the opinion of T. Chandrashekhar, the head of the urban development authority of Greater Mumbai. He recently announced that the Tata small car would “seal the fate of the city”. Chandrashekhar threatened to go to the Supreme Court to ban entry in the urban area - home to most of the Tata companies. "The Tata car will suffocate the city," he said. The family in the newspaper photo, who previously struggled through the monsoon rains on their two-wheelers, may in the future sit in the dry in the car - and stay seated.

The Tatas have an excellent reputation as a socially responsible company. J.R.D. Tata, Ratan Tata's predecessor, had extended this responsibility to the environment and passed it on to his successor. “I am of the opinion that our company's social responsibility should not only serve people, but also the environment,” he said shortly after he took office. The Tata small car does not yet have a name. But some bloggers pretend to know him. Ratan Tata baptized it "Jeh". Jeh was the nickname of Ratan's great-uncle J.R.D. Tata. OK Tata?

Bernard Imhasly is the India correspondent for NZZ; he lives in delhi. In 2006, Herder-Verlag published his book “Farewell to Gandhi? A journey through the new India ».

This article comes from the NZZ Folio magazine from October 2007 on the subject of "Cars of the Future". You can order this issue or subscribe to the NZZ Folio.