Tata Nano About to Give Detroit a Run for Its Money 31 comments
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By Brandon Clay
Where was your last car made? Chances are the maker of the car in your driveway was headquartered in either Michigan or Japan. But what about the next time you go car shopping? Did you know there will be another player on the market? More than that, you won’t have the same selection you once had. That’s because some famous auto brands will disappear from auto lots in the next few months.
General Motors (GM) has its back against the wall. According to Forbes, sales plummeted 30.8% in March (month-over-month) for the iconic Pontiac brand. Year-to-date sales are down 43.5%. On Monday, GM announced plans to discontinue Pontiac by 2010. In fact, America’s largest auto manufacturer is set to lose 34 nameplates in 2010, 29% fewer than it sold in 2008. Even one-time industry poster child for good business practices Saturn is set to close in 2012.
But GM is not alone. Chrysler will also cease production of its PT Cruiser, Chrysler Aspen, and Dodge Durango. Altogether, auto sales are down 18.3% from last year. To say that American auto manufacturers are hurting would be an understatement. “Hemorrhaging cash” or “at the brink” would be closer to the truth. But for every loser in the market, there is usually a winner. Who will gain as the Big-3 collapse under their own weight?
One word: Tata.
Tata Motors Ltd. (TTM), part of one of the largest manufacturing entities on the planet, will soon release the world’s cheapest automobile in the United States. Debuting at $2,000, the Tata Nano is set for a July 2009 delivery. Tata already has 1 million reservations for their mini-car. If they could deliver, it would easily become the best-selling car this year. Keep in mind, only 13.2 million cars were sold in the nation last year. With this sort of demand, Tata will make waves when their vehicles start shipping.
What’s so special about the Tata Nano? For one, it’s cheap. Cash-strapped consumers don’t want to fork over $10-12K for a new economy vehicle. All they need is reliable transportation to and from work. In addition, the Nano’s rear engine and small tire frame gets an amazing 61.1 highway miles per gallon, making it one of the most fuel-efficient mass-produced cars in the world. (The 2009 Toyota Prius gets 45 highway miles per gallon.) So the Tata Nano is cheap, green, and efficient - just what the auto buying public wants right now. Good demand is a solid foundation for any business. That’s why we like Tata.
TTM jumped in recent weeks after falling in last year’s melt-down. In January 2008 it was trading near $20. At the beginning of March, it fell to just above $3. Then Tata rebounded fiercely, closing at $7.62 today. We think the uptrend will continue. Detroit’s market share is eroding for many reasons, but it seems almost certain to continue. To get a piece of the next winner, go with TTM.
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While the Toyota Prious is an excellent car, and the best deal in it's class, It's funny how WESTERN companies try all sorts of expensive technology fixes like hybrids, that add weight (batteries & extra electric motors) to car in order to increase it's fuel mileage. Addtionally these extra batteries and hybrid systems add addtional cost to the initial purchase price and increase maintenance costs. Some of these batteries only have a life of 5 years.
Then along comes a company that basically strips out all the extra weight to produce a vehicle that WITHOUT ALL THE EXTRA MUMBO-JUMBO gets 33% better gas mileage. And it comes from a country not know for their car-making prowess: India.
What remains to be seen is: will the Nano be reliable?
Tata World Nano- Airbags, bigger engine, sub-100g/km CO2 emissions:
March 15, 2009 # # Tata, Tata Nano # No Comment
" Autocar UK reports the Tata Nano will be rolled out globally under the name ‘Tata World Nano,’ as per Tata’s documents into which Autocar had peeped.
The Tata World Nano will have a better finish, safety features such as airbags and will have a bigger engine. The Tata Nano Europa which is presently the center of attraction at the Geneva Motor Show has a 3-cylinder engine. The World Nano will have a similar engine with a sub-100 gram/km CO2 emission.
Whether or not the Tata World Nano will sail to the U.S is still speculative, but markets such as south America and southern Europe will sure love the Nano. We’ll have to see how many more Mamatas politicians this little warrior has to fight before it finds homes in countries abroad. "
Example:
In the morning you wake up & brush your teeth(he makes tooth paste)
Go for shower (he makes soaps, detergents,hair oil, towels clothes)
You eat breakfast (he makes cooking oil some snacks etc.)
Go to work(Mercedes, buses, trains, locomotive)
They all need steel(TISCO Tata Iron & steel)
To run these you need power(generates power, TATA Merlin & Gerin)
You need A/C (VOLTAS)
Paper for office (Tata Paper),
Entertainment (NELCO radios, TVs)
Software export
You name it & they make it.
I was wondering what will many of the people be doing with 0 to 60 in 4 seconds (you can't drive on the streets max 25 miles until you hit freeway), Then most of us go to work in the rush time when traffic is bumper to bumper at 10-20 Miles/hr. So why is it that no body came with electric automobile which have been existent since the last 120 years?
If a car can ride on the bumpy roads in India, it can easily run on freeways here.
2000 is a no frills car but don't under estimate. The problem is that I worked for Boeing/McDonnel Douglas where UAW was there & the performance was mere 35%. So if the guy is paid 30$/hr, his effective rate is about 60$ at 70% performance or about 100$/hr.
Guys the wages are cheap in India & China. Even Japan can't compete.
2 way trade between China & Japan is 80 billion$ & that is in favor of China (because China exports Cilantro, tomatoes, all vegetables in general ). Japan can't compete with China in wages.
Apart from US there are other markets which are large (since the last 4 months China has been selling more autos than US). Look at the recent auto show at China.
This is the problem with large companies. I am the productivity expert (worked for about 27 1/2 years after getting my B.S. Electrical & M.S. Industrial Eng). People work in small companies & in large companies they just waste away time. But who can invest a billion$ risk capital to invest & develop 1 type of passenger plane?
Now just see passenger planes come from China. GE just bought 25 planes at 700 million$ & released it back to some Chinese air line. Same would have cost about a billion$ from Boeing.
McDonnel Douglass used to get complete nose built from China at 400,000$ including labor & material vs about 800,000 here.
Example: The police man is paid here 46000/year starting.
They are paid about 5000$/year over there. Does your cop catch 9 times more thieves?????
Stucco man paid here about 30$/he or about 240$/day. He is paid 7$/day over there. Does he produce 34 times output here??? Lay tiles 34 times?
Only in the high technology items it will make difference otherwise with world open, all countries will buy directly from where the things are cheap & good.
The rally associated with the release of Nano in India has run its course. Those who now buys the stock had better pray that the this car, which few people have yet seen on the road, live up to half as much of the hype.
first I would like to excuse my english.
School is a long time ago....
About the tata nano and the negativ comments about the saftey,
I would like to remark that a german newspaper (Financial Times Germany has already tested the tata nano by driving. The result: cheap- safety and green and GOOD CAR !
see: ( www.ftd.de/unternehmen... )
I agree completley with all what Brandon Clay has said.
(only some mistakes about the price for the US-market and
the time when the nano will be lanched in US..)
On my opionion all negativ comments are quiet the same comments which the japanese car-companies has got when they lanched their cars twenty years ago , could you remember ??
Now, Toyota is on of the best car-Companies in the World !
kind regards from Germany
massel
The American car market is a joke because they require all of these expensive safety features like airbags and certain front and side energy impact performance, but they allow the sale of 8,000 pound SUVs that are raised high enough where the bumper doesn't contact the other driver's car and this actually results in decapitations not infrequently.
Small, light cars are safer unless you have big, heavy cars. A small light car hitting a fixed object like a wall, tree, lightpost, etc. will release less energy and result in less damage and injury to the car's passengers than a heavy car hitting the same thing. It's a principle of physics. Small cars are very dangerous in the United States because when they are hit by a big car, especially one raised off the ground so that the bumper impacts the small car well above the bumper, even at slow speeds it can kill the small car's occupants and the bumpers, seat belts and air bags don't matter at all. A real reduction in auto fatalities and radically improved gas mileage, reduced air pollution and even reduced traffic could result from a stringent regulation of auto size and weight.
What some people also don't realize is that the United States uses more than 40% of the world's refined gasoline (not oil, refined gasoline), so when 50% of Americans moved to SUVs that get 11 to 15 mpg, it had a significant impact on WORLDWIDE gasoline consumption. It affects everyone. When you go to buy gas at the gas station, a significant part of the cost is reflected by demand and demand is reflected by gas mileage multiplied by miles driven. So when you see someone pull their 8,000 pound Ford Expedition into the gas station, realize that no matter what sort of car you drive, your gas is more expensive because they are bidding against you to use a whole lot of it. The proliferation of heavy, low mileage cars absolutely and undeniably and powerfully affects gasoline prices.
So let's look at the Nano. It gets between 50 to 60 miles per gallon, weighs 1,300 pounds and has a top speed of 75 miles per hour. To many Americans this may seem like a sad joke. But it's not. You aren't supposed to drive faster than 70 miles per hour in California and many other states and even those with faster speed limits only allow 75 except for a small part of Western Texas that allows 80.
"What about passing?" Oh shut up! It's illegal to exceed the speed limit while passing. It's one thing to say, "Well, everybody does it" and other to say that cars must be minimally designed to allow or even encourage people to break the law.
43,000 Americans a year die in car accidents. There are 6 million accidents annually and 3.5 million result in injuries. An incalculable amount of taxpayer money goes into the happy motoring project from ambulances and funeral parlors, to body shops, highway patrol, the ridiculous car/ticket/court/traffic school/insurance racket. The cost of owning and operating an automobile doesn't register in most Americans' minds because it is distributed. Imagine the cost separately of your garage at home, your parking at work, insurance, auto repair, gasoline, tickets, licensure, parking fees, bridge tolls, parking tickets, car washes. It's such a suck of resources that it is incredible.
Then there's the cancer. Did you know that if you live within half a mile of a gas station, researchers have found that your children will have seven times the likelihood of getting leukemia? Gasoline and its distillates have polluted so much soil and ground water and the automobile has caused so much lung cancer, so many deaths from respiratory illnesses in the very young and very old. 20% of children living in US urban areas have asthma due specifically to air pollution which is 60% to 80% caused by automobiles.
What about risks to the continued existence of modern civilization? Food production is petroleum based and global oil production is falling. From the evidence we have at this point, it seems highly unlikely that oil production will rise. It will be almost impossible to find and develop sufficient new production to keep depleting fields from dragging down overall production.
As oil prices rise, food prices will rise because modern food is petroleum (petroleum based fertilizer, petroleum based pesticide, petroleum fueled farming machinery and petroleum fueled transcontinental food shipping). Modern food is petroleum.
The Nano and China's Chery cars will have the unfortunate effect of driving up oil prices and rapidly depleting reserves because they will get a lot of people who previously didn't drive in India and China to start driving. The result will be catastrophically higher prices for food and fuel worldwide.
Americans may indeed start buying subcompacts like the Nano, not because they want to, but because they have to. If gasoline prices rise up to $5-$7 a gallon as a recovery takes hold next year or in 2011, happy motoring will resume its growth and probably take prices to $8 to $10 a gallon when combined with reduced worldwide production by 2012-14. At those prices, the exurbs will become ghost towns. Only the top 20% of income earners will even be able to afford fuel to make very long daily commutes and that to 20% isn't the group that moved out to the sticks to buy a cheap McMansion anyway.
My fear isn't gasoline prices because that will drive a much needed reduction in car sizes and car driving. America needs that and it would make for less respiratory illness, less asthma, fewer car accident deaths, less cancer, and less offensive noise and dust that keeps most Americans from even walking to the store because it's a dirty factory out there.
My worry is that it will cause food prices to skyrocket. A "successful" American family will be one that can afford food and fuel. It may become the new bling. "Did you see the Johnsons next door came home from the grocery store with four bags of groceries and they drove! They must be doing well." Americans will get gasoline company credit cards that tie into home equity loans while the Federal Reserve and US Treasury claim that Fannie, Freddie and FHA need to refinance borrowers to help them "afford" fuel and food by using their homes to finance those weekly consumption expenses over 30 years.
Anyway, this is a rant, but I had to do it. The Nano would be great for the US, but Americans don't get where things are going yet. The US uses twice as much energy per capita as Europe and Japan. That means that as energy costs rise, the US will be hurt twice as much as Europe and Japan. An American with an 11 mpg truck designed to ferry agricultural workers but sold to the gullible as a "luxury vehicle" because it has a ridiculous Cadillac emblem on it will suffer four times as much as gas prices rise as a European driving a 44 mpg subcompact. And it's worse, most Europeans and Japanese who take electric subways and trains will suffer even less of an impact from that gasoline price increase.
Combine that with American urban development where the suburbs are so far from work centers and miles of tract homes are connected to "office parks" by freeways, and you have a disaster on the horizon. What's coming will hurt everyone, but it will hurt much worse here because of the way this place is designed.
There is a limited amount of time and a limited amount of resources going into this. It will take huge cultural shifts and hundreds of billions of dollars, maybe trillions, to rework the way we do things here to avoid a catastrophe. Arrogance will probably stop that from us even talking about it.
But if you take a calculator and figure that the average American will have to pay 4x or 6x as much as the average European or Japanese to maintain current habits per unit of gasoline price increases, you can see how this will cost jobs, production, economic activity. It will change American behavior by force. Instead of embracing the future and doing our best to meet its challenges, the future will bring us to our knees and from that uncomfortable position, we will make practical choices.
Maybe we should all buy some knee pads.
any information given.
The Nano is a great thing for India and other places like that. That
was what it was intended for. To bring it to other more affluent countries
may or may not ever happen and if it does it will be a long time.
What a boring article. You are surely not aware of the ground realities about Nano.
Even though the car seems to have a million reservations, I can almost certainly tell you that there are a lot of these that are fake and done by the 'appointed' dealerships to create an artificial interest.
This car will definitely appeal to those who drive a two-wheeler and have a small family. But ask any one who travels in a car in India , and they will tell you that in a small car like that, they still expect some added frills such as an A/C. It gets unbearably hot in summers in most metros.
This car is a reminder of the old cars in India known as Premier Padmini and they are a heated cooker in summer if you have every driven one.
If Tata manages to create a quality product and i have no doubt that they will sink in a lot of money to do that, it will in the long run be a viable product. But i dont see Tata breaking even on their investments atleast for 8 more years given the political upheaval currently happening in India.
In addition, the economy - for the uninitiated - has taken a huge dip. Even though there is growth, it is nowhere like to roaring late 90's or early 2000s. People whose fortunes are tied with the big corporates are hurting.
Everyone from a panwallah (the small corner store selling cigarettes and paan) to the mall wallah (store owners in the malls) are all complaining about business being down anywhere between 40-80%.
Needless to say, I am skeptical about the numbers.
Tata, on the other hand , might have a winner in the Indica Europa or something like that, which is an electric car. If it can create a dealer network or leverage the Jaguar dealer network, it could have a good product in Europe.
I am however skeptical about the success of Nano. We need to see real data before jumping on the bandwagon.
Also, US is a completely different market. Hyundai , which is by far the largest car selling company in India, is still struggling to make ends meet in the US. And this inspite of creating new models, and adopting the Honda-Toyota approach of introducing products at a lower price, better quality. However, the lack of dealership network and trust in the product has so far kept that brand in a very fluid state.
And we are talking about Nano? For all its greatness of the Tata group, I wouldn't ride in a car without airbags, and not even any other basic features.
I am a simple man. A simple trader to be exact. I don't understand much fundamental geekery. Speak can't much no Anglesias too.
I just wanna ask you one thing: A very simple thing.
How did you come across the magic figure of $8? How?
Its neither a previous support, nor a previous resistance. No trendlines as well.
IMO, $9.5 is the price you should be looking at. But then smart money already bought when it crossed $5.75
Even in India, Nano is considered a motorcycle with a roof. It lacks basic features, including side mirror and seat belts. The $2500 price gets you exactly what it is - a motorcycle with a roof. For it to even begin selling in the US, it has to undergo a complete redesign. It has to include a safety shell, proper crumble zones and other basic safety features to score even 1 star on the crash test. The R&D for the redesign itself will add hundreds, if not thousands, to the cost of the car. Then the manufacturing cost of the features will add more. Air bag are mandatory in the US. That will add more. Seat belts and side mirrors are mandatory. It will add more. Once you include all the costs for bringing it to 1-star safety standard, you will have a $6,000-$7,000 car. Mind you, it will have a car with absolutely nothing on it.
Second issue is reliability. Can you assure me that this car will not deteriorate and collapse after 1-2 years in service? No one can, it has no history. It can be assumed that it will be as good as Yugo.
The question is, will the American buyer go after a potential lemon with no power steering and radio, at the cost of $7,000? Or will the same buyer get a used Toyota (which will probably serve longer than brand-new Nano) with better safety and features? I bet, most will choose the latter.
Speaking of business brilliance of the car - what will be the margins on it? Sure they may sell a million Nanos a year in India. But if they make $100 off each, does it make business sense for any Western, Japanese or Korean company to get involved in such business?
On Apr 30 08:22 AM theeye wrote:
> In answer to Tata's Nano, this car will be very unsafe on American
> roads. But many people who have not the ability to purchase a new
> car might opt for this modern day Yugo at that price, but rest assured
> that the insurance companies will take note to keep it out of the
> hands of the working poor by raising rates to offset any savings.
>
Ratan Tata specifically said this was for families that are currently commuting up to four people on mopeds -- It is a greatest car imaginable for somebody in Uttar Pradesh. After US crash testing, emissions, power, etc. this will be like an unreliable, quick-to-rust crumple-able version of an Echo.
I say bring it on. Dodge Calibers will look great in comparison.
America has LOTS of BIG RIG and BIG SUV on the roads. Hack with the gas price and MPG. Do you put a price tag on your life? Must ppl buy a new car? What about used car?
I had a mid-size sedan and didn't feel safe next to those BIG SUV and trucks. I now drive a used expedition. It feels a world of different.
Sure car should be BAN in the US.
Americans have this strange idea that driving a big SUV makes them safer. Nothing could be further from the truth. SUVs lack a monocoque cage structure that protects occupants and allows effective crumple zones to be provided. Also, it is the design of the vehicle and not its size that has the biggest impact on vehicle safety.
Compare the crash test video. See how the Ford Ranger's cabin folds up on the offset test. The Nano cabin remains intact and protects the driver. The tests are carried out at 35-40mph and take into account occupant protection and deceleration forces that occupants are subjected to. Basically, in a 35-40 mph crash, the Nano is safer than a Ford Ranger SUV.
At higher speeds, occupants of neither is likely to be safe, but those in the Nano will still be safer than those in the Ford SUV. In real world crashes with other vehicles, the Nano will do much better safety wise in comparison to the Ford SUV than in the EuroNCAP tests where it is crashed into a concrete block. This is because the difficulty in designing small cars the Nano is in the limited crush depth available. They need to employ clever design and extensive computer and real crash testing to achieve the necessary safety rating. However when crashing into another vehicle, the other vehicle's crumple zone adds to the Nano's crumple depth, making for a much safer crash than crashing into a concrete block.
The tests don't lie, and they prove once and for all that the Tata Nano is safe for US roads, and in fact safer than most SUVs driving on US roads.
Ford Ranger 2008 - EuroNCAP rating - 2 Star
www.euroncap.com/tests...
Crash Test:
www.euroncap.com/Playe...
www.youtube.com/watch?...
Tata Nano - 2009 Testing - Expected EuroNCAP Rating - 4 Star
www.youtube.com/watch?...