TATA PEOPLES CAR

The defining reason behind a low cost peoples' car has been just that: low cost but for a car nevertheless. All through the last century car makers, policy pundits, savvy marketing whizzes and many entrepreneurs have been trying to put the world on wheels. Herbert Austin, William Morris, Henry Ford and also one Adolf Hitler (his vision was developed and executed by Ferdinand Porsche) understood this and we ended up with cars like the Austin Seven, the Morris Minor, the Ford Model T and of course the Volkswagen Beetle. The very concept of the peoples car has evolved all through the last century and today it borders on what footprint it would occupy on congested roads, how effectively it would seat four, how effectively it would marshal resources and also how efficiently it would go about doing the business of basic commuting. The first peoples' car in India dawned upon the powers that be sometime in the mid-1960s when the government floated a tender inviting bids from local manufacturers for a contract to give the citizens of a then socialist India a low cheap but reliable car. The Tatas, the Firodias, the Birlas and also the Mahindras had considered this and in most cases had also come up with completely working examples of such cars. Of course these were largely done with existing European brands but as history ahs shown it was Sanjay Gandhi who walked away with the money. A total of 29 examples later and the money ran out. Sanjay Gandhi's original Maruti operation was nationalised and after a preliminary dalliance with Volkswagen, Japanese small car maker Suzuki entered the fray on a lucky rebound and made the move stick. From penury to abject profits, all in the noble cause of making a peoples' car saw not just the humble Maruti 800 make its debut in 1985 but in its own way helped to upgrade and globalize the Indian automotive industry.

Almost four decades after the Indian government's first project for a peoples' car, new circumstances have set the stage to prompt an Indian car maker to boldly rewrite the book for what constitutes a peoples' car for the 21st century. If you weren't there at Auto Expo in 1998 when the country's first indigenously designed and developed car - the Tata Indica - was introduced, you could have been forgiven for having missed out on an even larger story lurking in the sidelines. If you were there and had somehow missed seeing the Tata microcar concept in a corner of the large Tata pavilion you would have probably missed out on the next big thing in small cars. It was right there - staring all and sundry in the eye but the Indica out-dazzled them all. In fact it also made Maruti do something which everyone had thought till then was well nigh impossible - drop prices. "Only a concept, just an idea" ran the economically worded spiel on the Tata microcar which was christened the Zing. And right there it was abundantly clear as to the overall positioning of such a car - Built predominantly for markets in develping nations, this was a practical microcar meant for small families and groups on one hand while more adventurous applications could be turned out as fun vehicles for recreation. The concept ethos for the Zing also spelt out that it was to use basic three-wheeler autorickshaw technology and apply that with a fourth wheel, the entire package clad in a stylized body which would end up as the perfect utilitarian car for the asking. Ever since that day the entire automotive industry has lived in denial of not just the concept of such a car but also its efficacy. Well they did live in denial till about a year ago but with just days to go before Ratan Tata pulls the wraps of what is to be the world's most cost effective automobile, there will be no place for any of the big names to hide and ignore this segment. Lets look at the genesis behind the Tata peoples car. I am reminded about the stunningly large full page ads from Bajaj Auto for its then best-selling Chetak scooter which showed a smily Sardar with his two cute kids riding pillion and the cover of the spare wheel sporting the legend "Chunnu, munnu de pappe di gaddi." In any form of the vernacular this effectively inferred the two-wheeler with the status of the quintessential family car for the majority of our impoverished populace.

It was probably the lack of all weather protection, the inherent instability of a product with just two wheels and no fallback on safety which probably got Ratan Tata thinking. In fact when I had interviewed him sometime in 1997 and quizzed him on some preliminary work his company was doing on a bare bones autorickshaw sporting four-wheels, he did mention and quite frankly that his company was exploring concepts smaller than not just the 407 LCV but also smaller than the 206 pick-up. And as everyone knows, this thought process did result in the Tata Ace some two years ago. From thought process to firming up a concept to developing and putting it into production took Tata Motors the better part of a decade as regards the Ace but when you factor in the larger picture - read that as Indica, trucks and buses, it was clear that the company had thought about and readied the right concept at the right time. And I tend to think that while the Zing microcar concept might have been espoused in 1998, it just so happens to be the right time for such a car to hit our roads in the third quarter of 2008.

SYSTEMS ENGINEERNG - COST & DESIGN

The earlier concept which was espoused by Tata Motors talked about a rupees one lakh car and while in the year 1998 a Bajaj Chetak sold for Rs.24 ,665/00 (on the road price in Pune), the one hundred thousand rupee price point looked attainable. For the record you could have had the standard Maruti 800 then for Rs 2,77,558/00 (OTR, Pune).It was about this same time that companies such as Kinetic Engineering and Eicher were also bullish about the one lakh rupee car and had shown their hand with their own proposed models based on the Italian Axiom and French Chatenet Stella respectively. Probably it was the experience of these two which prompted Tata to do a rethink on how to go about the game. Both Kinetic and Eicher took off with scaled down microcars as sold in Europe. Probably they were seeking a beneficial hand from the government whereby excise rates (then a hefty 40 per cent) would be lowered for such a car. With the government obviously in the same business thanks to its stake in MUL, this wasn't granted. As such this brought home to the fore the need to rethink the design plus the structure of the car and also the manufacturing techniques which could be cost effective. This conundrum of costs, quality and profitability was the toughest one to overcome but good design and great value engineering was what the project team would have faced to achieve the three-pronged objective. Taking a leaf from the two-wheeler industry's supply chain was a major step in the rethinking, especially in terms of critical component manufacturing and sourcing. Good design played its own role by way of a rear engine layout, the fine packaging rewarded itself with not just room to seat four occupants in reasonable comfort but also resulted in less material costs and less complexity.

Tata began roping in component makers, both established and new, to start thinking radically. Two instances come to mind immediately. The first was of course the employment of a constantly variable transmission system, as used in scooters and for this Tata Motors tapped into the expertise and resource of the Kinetic Motor Co. Ltd. which was the first in the country with CVT scooters. Kinetic will supply the CVT gearbox for the Tata peoples' car and that too at a truly cost effective price which would spell a win-win situation for both. Factoring in the established technology providers also called for a revision in thought and none came better in this line of action than the German automotive technology giant Bosch. "Intelligent solutions would be key to delivering profitability to both component makers and OEMs," said Dr Bernd Bohr, head of Bosch's automotive business. He further added that part makers should "avoid digging up old technologies or making current technologies a bit simpler." And that is what Bosch has come up with, engineering simplicity in the drivetrain of the Tata peoples' car by ditching costly electronics and making just the barebones needed to get the job done.

The smart money suggests that the Tata peoples car will employ a twin-cylinder engine equipped with a simplified fuel injection system - made by Bosch and known as the Value Motronic - without the turbocharging, direct injection and complex sensors which are demanded in the mature markets. One has to understand that the Tata peoples' car may be the size of the Daimler Smart but it is smarter than its German counterpart in pricing and in positioning. The two address two different needs and so comparisons are meaningless though they end up physically looking the same. Tata has also developed intelligent production systems whereby a lot of bonding is used in place of welding and also more glass is employed. There will also be fewer sheet steel stampings - reduced cost of manufacture and also of material wastage - while the compact design with the rear-engine layout (similar to that of the not just the original VW Beetle but also the next VW value car for the BRIC nations) will manifest itself towards the efficacy and efficiency of the machine

CUSTOMER PSYCHE & ACCEPTANCE

The biggest aspect about the Tata peoples' car as against theoft-termed one lakh rupee car is who would buy it. Quite frankly withthe Indian car industry annually breaching the one million plus units barrier comfortably in the past few years and also the Indiangovernment's laudable automotive mission 2010 to make India a smallcar manufacturing hub for the global car market, the new Tata microcarcould spawn a whole new genre of owner/users. In the process it could also change the dynamics of the automotive business, whether it hastwo-wheels or four.Rule out the hoity-toity set right away for this bare basic machinebecause it will not have the stature to make the swish set stand out. By extension rule out the metros as the biggest markets on this countplus another which we will get to in a jiffy. The Tata peoples' carwill have very narrow performance band which would not see it do tonup top speeds or dazzle everyone in the zero to to 60 km/h sprints.Give its engine capacity and its power to weight ratio, plus also itsCVT transmission, the car would be geared for strong commuting and atorquey mid-range so as to deliver effectively easy city commuting (read that as low median speeds of anywhere between 30 to 60 km/hin-town) and also deliver meaningful fuel efficiency.

The target buyer is one who would accept a car that is functionalrather than ostentatious and frankly there is nothing to be said about adding luxury frills and gadgets which would detract from the low costethos, both from a manufacturing as well as an ownership point of view(though there would be some who would like to customize such a car and stand out from the mundane masses).The oft-implied objective of making a safer alternative to thetwo-wheeler would be obviously manifest but if one is looking totranslate owners of high end bikes like the Bajaj Pulsars and Hero Honda Karizmas (top end versions of both priced around the Rs90,000/oo mark OTR Pune) into buying the Tata peoples' car then youare looking at the wrong end of the scale. I strongly think that itwould be the Splendor - Discover - Victor set (bikes in the price bracket of Rs 40,000 to Rs 45,000) who would make a beeline for thiscar. And here lie the large numbers if one cares to take a peek at thelargest motorcycling segment in the country. The Pulsar / Karizmaperformance minded enthusiast biker can't do with the anemic performance on offer from the small car. However what is a vice tosome becomes a virtue to many others for the 70 km/h top speed and theeasy lugging ability would be just the ticket for the 100cc executivesegment bikers wanting to have a machine that could work in the sameperformance band as their two-wheeled steeds. Not to mention theoperating costs which have to be within the realm of the two-wheeler.

Cities like Pune, Baroda, Jaipur, Mysore would vie with centres likeSatara, Kolhapur, Dibrugarh, Jalna, Ranchi and the like to set thesales charts afire for such a car. Tata Motors will also be seeking totake a leaf out of Bajaj Auto's Pantnagar production facility to enable the car to be put together quickly using very leanmanufacturing methods. Also utilizing the most tax holidays by housingassembly plants at various geographical centres to minimize distanceto market would be just as telling as time to market. Apart from the 100cc executive motorcycle class, the Tata peoples' carwould also invade the burgeoning second hand car market wherepresently five to seven year old Maruti 800s can be had for around Rs60,000 to 70,000. In turn once again expect MUL to drop prices ofbrand new 800s even further because the Tata peoples' car could end upwith an ex-showroom price of around Rs 1,25,000/00 (inflation if takenover a decade plus could have bumped this figure even higher) and if atried, tested and proven model could be offered for around Rs1,50,000/00, it would prolong the life of the car that broughtinternational motoring sensibilities to our market.

THE GLOBAL APPROACH TO RIVAL THE TATA CHALLENGE
As I mentioned earlier, most car makers, with the Japanese brigade(Suzuki, Toyota and Honda) and Hyundai of Korea living majorly indenial of a one lakh rupee car for a long time, it was left for none other than the acknowledged champion bean counter Carlos Ghosn to payRatan Tata and his concept the ultimate accolade by stating quitefirmly that established OEMs would have to learn new ways to do thecar business. And the most significant of them all was what Tata Motors intends to offer. When I caught up with him on the Nissan stand at last October's TokyoMotor Show, Ghosn put it quite tellingly when he told me that "Thechallenge is to build a low-cost car that makes money." And he knows that the key to doing both a small car and profitably at that meansjust driving down the same road as Ratan Tata has done. However, giventhe manner in which Ghosn has made alliances work the world over, hehas singled out Indian motorcycle maker Bajaj Auto as an alliancepartner for just such a peoples' car and therein he might have seizeda worthwhile ally, not just to take on the Tata car but also to enableRenault-Nissan to benefit with such a model in its product portfolio for markets in south America, Africa and the BRIC nations.Ghosn has already shown that cut price saloons like the Renault Logancan rake in the money and he needs to do it again with an even moresmaller and sensible city car. Two things stand out for Renault behind this move to go smaller and cheaper. Ghosn again takes up the running:"If Tata can do it, we can do it," as well he implied. "Cost would bethe main challenge, but it would also have to be robustly structured," he added.

Another reason behind the Renault-Nissan alliance trying to muscle inon a virgin sector is that all mature markets are stagnant as regardsgrowth but pent-up desire from first time aspiring car buyers in developed worlds for low-cost cars is huge. "If we are not present inthis segment of the car game," he told me at Tokyo, "we risk losingsome of the knowhow to compete." And for a top 10 ranked car maker to lose out thanks to being absent would be commercially disturbing.While Tata had started the ball rolling with a rupees one hundredthousand price point indicator which at present day conversion ratespoints at a US $2500/00 mark, Renault as well as Volkswagen are looking at making their products for emerging markets at the US$3000/00 price point. VW has taken a long time to think small. It hastaken en even longer time to think about the developing world.Designing and developing a small car to a price point is an infinitely greater challenge than doing an S-class or a Ferrari where money isnot the objective but class, technological overkill, performance,dynamic ability, luxury, charisma and brand character are standoutattributes. Last year the VW group gave the go ahead to its design and engineeringteams to put into motion a range of small cars which could be made forfashionably conscious techno-savvy markets like the US and Europe while on the other hand they could devise stripped down versions withsmaller but more efficient engines for the impoverished markets.Walter de Silva, the legendary designer who heads up the design teamat the VW Group, went back into history to drum up the rear engine, rear wheel drive config of the original Beetle drummed up in themid-1930s by Ferdinand Porsche. The new VW UP! Range of city cars isexpected to be built in India as well, from around 2010, powered by atwin-cylinder or a three-cylinder engine. It will be a marvel of packaging, and while it would be slightly bigger than the Tatapeoples' car, it would definitely bring very usable modern technologywithin the entry level segment of the car market.

Toyota has been, in typical Japanese style, very secretive about its own intentions of a US $3000/00 entry level segment offering. Thisprogramme has now been accelerated and could form the basis for a newcar for the BRIC nations and also for other south-east Asian nations.Given the GOI's automotive mission, Toyota could base this project completely in India.And since everyone is agreed on radical design being the key tolowering product and manufacturing costs, the seal on such a fact wasstamped when none other than the great automotive designer and engineer, Gordon Murray announced his own plans to do a radical citycar for the equivalent of just under Rs two lakhs! Murray who designedthe Brabham F1 cars which won F1 World Championships for Nelson Piquetand also designed the epochal BMW V12-powered McLaren F1 sports carwhich also won a few times at Le Mans is a man who is up for thechallenge. He has set up his own unit Gordon Murray Design Ltd., atGuildford, Surrey and while many are already aware of what his past record stands for, everyone is eagerly awaiting his new car. Murrayhimself has gone on record to say that his small car, code-named theT25, would be unlike any other car built previously. While Smartdreamed up its small city car and Renault made a saloon very cheap, Tata intends to do something for far less money than anyone else hasto date. So what or where will Murray's creation speak for itself? Ithink it would be in its amalgam of innovation in practically allareas of its makeup - design, engineering ingenuity, pricing as welland also its environmental impact - and adding to that would be thefun to drive element as also the desirability of owning such a smallcar. If any one can do such a thing, I can bet my last rupee that it would be Murray. Maybe Ratan Tata and Gordon Murray need to meet.Together they could be terrific!