The secret146;s out, it146;s a Nano

It is never easy for something that has so much riding on it to deliver the goods like Tata Nano.

It is never easy for something that has so much riding on it to deliver the goods like Tata Nano. The People8217;s Car saga has it all 8212;widespread speculation on whether it would meet the emission and safety norms, rumours that it may never take off and finally a Balaji like twist with an alleged rival trying to skittle its plant at Singur. Despite this, the car is here and ready to take the Indian industry to a completely different plane.

Tata motors is no social organisation and though it was a noble cause of providing individual mobility for all that spawned the idea of the Nano, it is still a project that is intended to make money. But in an inflationary market, how can a 2500 car sustain itself? The answer lies in volumes and Tata is banking heavily on this.

8220;The Rs 1 lakh car is a concept that is derived out of a social cause. But now that we have realised the concept, it is as much as any other business project. The Nano is intended to make money and to realise this, there will be several versions of the car with margins spread over,8221; said Tata Group chairman Ratan Tata. 8220;The standard version does not have a huge margin but the deluxe versions will make enough money for us to subsidise the standard version.8221;

To begin with, Tata is setting up a capacity to produce 250,000 cars that would be expandable to 350,000 units at its Singur plant in West Bengal. But a quick look at the potential on the cusp of which Nano sits today would prove that Tata would need to maybe treble its capacity in a very short period of time.

International consultancy firm and the most respected name in global auto industry, J D Power, believes the car will make a dent in the top-end motorcycle segment. In layman8217;s terms, Nano will give competition to the Karizma, Pulsar 200-220cc and the Avenger.

Similarly, a study by Associated Chambers of Commerce on two-wheelers versus small cars says more or less the same thing. The study reveals that the car will capture as much as 25 per cent of the two-wheeler market. That means Nano would find a market of over 19 lakh at the very outset, making it not only the largest selling car in India, but globally from its very first year.

8220;Consumers are more inclined to buy budgeted cars to satisfy their quest for prestige. Metro consumers feel that these cars would not only serve their needs better and tend to their requirements efficiently, but also provide 8220;safety8221; compared to two-wheelers,8221; the study says. 8220;Ninety per cent of respondents in the semi-urban segment have categorically stated that they would rather manage their movements with their existing possessions than invest in buying a two-wheeler as the 8220;small car8221; is likely to hit the market this year.8221;

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These numbers are huge. The overall passenger vehicle segment saw sales of around 13.8 lakh in 2006-07. Tata does not have the resource for this, but what is certain is that the car presents for the first time a situation when two-wheeler manufacturers would see some direct competition from carmakers.

The threat to carmakers like Maruti and Hyundai is equally serious. Both companies, who do not have products to rival Tata, would be bereft of this huge potential market.

The battle lines are drawn and the stakes have been placed. All that is left for the other players now is to play catch up.