India’s $2,500 Car

What Will The Tata Rs 1-Lakh Car Be Like

By Ruth David
December 27, 2007

Some of the secrecy surrounding the Tatas’ Rs 1-lakh small car has been shed, with a company executive disclosing that the vehicle will get 25 kilometers (15.5 miles) per liter and in performance terms will match the Maruti [Get Quote] 800, one of the most popular cars in the budget segment of the Indian market.

“It’s an eco-car with a 25 kilometer-per-liter mileage on petrol, meets every international standard and specification, including Euro-4 norms. Acceleration wise, it’s the same as a Maruti 800,” R A Mashelkar, a nonexecutive director on Tata Motors’ [Get Quote] board, told reporters in Kolkata.

He was recounting a visit to Tata Motors’ plant in the western city of Pune, during which he rode in a prototype of the vehicle, which is expected to launch in the middle of next year and will be priced at Rs 1 lakh (Rs 100,000) (approximately $2,500), the cheapest for such a passenger vehicle in this market.

Mashelkar also put to rest questions on how spacious the car would be, explaining that there was ample space in both the front and the rear to fit his six-foot frame. “In a bid to reduce weight of the car, Tata Motors’ engineers have used more plastics. The car does not use too many bolts which also helps in reducing weight. Instead, it’s all a new kind of welding,” he was quoted as saying.

Mashelkar also spoke about the moment when Tata Group Chairman Ratan Tata decided he needed to make a small car. “You know how ‘Ratan’ thought about this small car. . . One day he was going on the road and saw a family of four getting soaked in the rain. That was when he decided to create a small car for all,” he recalled at a conference in Calcutta.

Tata Motors is hoping its small car will make inroads into the market for two-wheelers in India. Within the automobile sector, its closest competitor is Maruti Suzuki, which makes around 50% of the cars on Indian roads.

During a visit to India last week, Suzuki Motor Chairman Osamu Suzuki expressed skepticism that an auto manufacturer could produce a vehicle at the selling price promised by Tata.

Earlier this year, Nissan Chairman Carlos Ghosn also announced plans to make a car priced at around $3,000 for the Indian market.

Tata will face increased global competition if its bid for Ford Motor’s Jaguar and Land Rover brands is successful. Reports emerging from Britain pegged the Tatas as front-runners in a race that includes India’s Mahindra and Mahindra and U.S. buyout group OneEquity.

Ford is expected to select a buyer before the month end or early next year, for a sale likely to fetch about $2 billion.