After a gap of nearly five years since the Oilholic’s last visit to India, yours truly arrived in Delhi on Friday to witness a ‘crudely’ altered landscape. Every conceivable brand of automobile is now available to Indians for a price. Swanky new shopping malls, new flyovers and never ending housing and commercial construction now grace the Capital’s landscape (and suburbs). All of these are intertwined with a super-congested roads network and a really decent mass transit system.
The Oilholic was particularly keen to spot a ‘One Lakh ki Gaadi’ (INR1 Lakh car) which in other words simply implies a car costing INR10000 (a ‘Lakh’) or US$2000 – the brainchild of Tata Motors. It was launched 2009 amid global headlines. However surprisingly, you’d be hard pressed to locate a Tata Nano (which is its official name) easily in the Indian capital.
It took the Oilholic a good few hours and a walkabout in an underground parking lot to finally locate one to click for his blog. The reason is as clear as the model’s sales data for Tata Motors – the current owners of Jaguar / Land Rover. The company set the Nano’s sales of target at 25,000 per month but in actual fact moves car units well below the target. Its plant which is capable of producing 250,000 Nanos barely manufactures 10,000 a month.
The reason is clearly apparent – the poor man shunned the ‘affordable’ car and status conscious middle and upper class income groups simply did not wish to be associated with it. Safety concerns also hit sales sentiment after news emerged that a number of Nanos saw engine fires.
Furthermore, rising Indian inflation has put paid to the “One Lakh” tag as well. The tag was in any case only applicable to base model - sold rather unintelligently without air conditioning in India’s sweltering heat where temperatures often touch 40 degree centigrade. Even the base model now costs INR1.41 Lakh or approximately US$2810 at current exchange rates. Should you need one with all the trimmings, you’d probably need close to INR2 Lakh.
The company is now trying desperately to repair the Nano’s image. According to a Nano dealer in Noida – a Delhi suburb – Tata Motors is coming up with a scheme to double up the car’s warranty to four years and serve up an INR99 per month maintenance contract. Akin to a model employed by Kia motors in nascent markets, Tata Motors is also looking towards providing cheap car loans with down-payments as low as US$300.
The damage might already have been done, but Tata as a conglomerate has been known to rise to far serious challenges. Reversing Indian acceptance of the Nano is as serious as they come. A word to the wise environmentalists who said the Nano would worsen Indian traffic congestion and raise pollution - the country has managed both quite well without the One Lakh Car's help!
Moving briefly away from the Nano and speaking of damage, Transocean continues to feel the effects of the BP-Deepwater Horizon Gulf of Mexico spill. On Thursday (Jan 26th), while the Oilholic was up in the air heading to India, a US court ruled that Transocean would be protected under the contract indemnity agreement for claims for compensation by third parties.
While this is positive for Transocean, the Court also ruled the company would not be indemnified for any punitive damages or for any civil penalties and fines assessed to Transocean, if any, under the Clean Water Act (2005). Ratings agency Moody's believes partial summary judgment is credit negative for Transocean with up to US$10 billion of debt affected. That’s all for the moment folks, keep reading, keep it ‘crude’!
© Gaurav Sharma 2012. Photo: The Tata Nano © Gaurav Sharma 2012.