India has always been one of the biggest destinations of automobile majors throughout the world. Not without any reason. It has the second largest two wheeler market in the world, fourth largest commercial vehicle market in the world and the eleventh largest passenger car market in the world. So as it is, it’s a very big and a potential hub for a lot of market leaders elsewhere in the world to come and invest.
Auto Expo is here again. And the biggest attraction this time around is the Rs. 1 lakh people's car from the greatest car manufacturers in India, the Tatas. Ratan Tata, as promised, launched the car called "Nano" today on the inaugural day of the Auto Expo 2008 at New Delhi. With more than 35 new passenger car models expected to hit the Indian roads in the coming financial year, it’s going to be rather interesting to watch the scenarios unfold in the Indian Automobile market.
First and the foremost, the main important question that has always been raised is, how is going to affect the two wheeler industry? Well that’s a really interesting and a debatable point. I have always been very keen to see how it’s going to unfold itself. With the introduction of the low price car, many feel its going to affect the two wheeler market. I have more than a couple of reasons to strongly believe it will not.
One main reason why I believe it is not going to affect too much is because as quoted by Tata, Rs. 1 lakh is going to be the dealer price (not ex showroom price) for the car. So lot remains to be added to it. VAT, excise duty, dealer margin, etc added on will give the ex showroom price. And on that one has to add the cost of registration, life tax, etc. So I don’t expect it, to create a hole in the buyers pocket less than Rs 1.4 lakhs minimum. And that’s only about the basic model. As the luxury increases, the cost escalates accordingly. A normal Indian two wheeler comes around a price tag of around Rs.50000. So I don’t think many people will pay three times more and go for a car, just because it is cheap.
Secondly, the fuel economy provided by a car. At best 25kmpl. That’s nowhere compared to what a bike will give. There are motorcycles in today’s market in India, which give 75kmpl also. So running cost in case of the car, can simply be taken as three times of that of a two wheeler. And mind you, the Indian public is very very damn sensitive about the fuel economy his vehicle gives. I even remember one of my friends, arguing with me, about a premium segment bike, something which is designed for power, pickup and style. Fuel economy is never a criterion while designing such bikes. But then, that point always remains in one corner of a general Indian's mind.
Thirdly, giving a car for Rs. 1 Lakh raises a lot of questions about the reliability and quality of the product. Though the Tata's have been known for quality and reliability, much remains to be proved. They have claimed that it conforms to the highest levels of safety standards; the real test is when the car hits the roads. Any number on tests on the software, or any number of accelerated tests is not at all comparable to what actually happens in the field. So frankly speaking, that’s one more reason.
Fourthly, let’s be a bit practical. Considering the scenario of traffic and roads in India, and the rate at which infrastructure is growing in comparison with the market, any fool will prefer to travel in a two wheeler (for regular use, not for picnic or time pass or once in a while trips). For the simple reason that, with a two wheeler, sneaking anywhere is far easier than a four wheeler. And definitely faster too. And then comes the bigger problem of parking. Two wheelers can be parked anywhere on the road, but that’s not the case with a four wheeler. So, the whole point is unless there is some way where these two issues are addressed, I don’t think anything significant is going to happen.
People have always argued that, as the country becomes developed, the number of two wheelers in the country will reduce significantly, and the number of four wheeler users will increase drastically. I too used to believe it to some extent. I recently came back from Kuala Lampur. True to some extent, I hardly found a two wheeler on the road. Everybody literally had a four wheeler. But then, Malaysia is Malaysia and India can never become that. For the simple reason that India is a vast country, with a huge population. With people of different cultural backgrounds, it’s really going to be difficult to integrate people. And with the sense of discipline what I have seen among Indians, I don’t see it happening atleast for the next 50 years. All the technological advances and all have only increased the gap between the rich and the poor. The rich may be increasing in the cities. The standards of living may have improved. Everyone may be having a TV or a computer or whatever these days. But then there are a different set of people living in the villages, who still travel on bullock carts even though he knows how to ride a bullet, people who still use oxen to plough their fields even though they know there is something called a tractor which can do the same thing faster and more efficiently. So it’s only that there are still people who earn less. There still are people who don’t have basic healthcare within a 5 km radius of where they live. So it’s simply not easy to integrate India and make it developed. And the politics and politicians we are having will ensure that it will never happen.
The major reason for the slump in the two wheeler industry happens to be availability of finance, which itself adds to the fact that the people here are not all that rich to buy a bike on their own. And the interest rates are booming so high, and recovery also has become more and more stringent. So that’s one and probably the only reason for the small decline in the two wheeler industry. The point is, even if someone buys a car, he will definitely have a two wheeler with him. If at all anybody is going to be affected by the introduction of this new low cost car, I strongly feel its going to be the small car manufacturers like Maruti and Hyundai, rather than the Two wheeler Industry as a whole.
Auto Expo is here again. And the biggest attraction this time around is the Rs. 1 lakh people's car from the greatest car manufacturers in India, the Tatas. Ratan Tata, as promised, launched the car called "Nano" today on the inaugural day of the Auto Expo 2008 at New Delhi. With more than 35 new passenger car models expected to hit the Indian roads in the coming financial year, it’s going to be rather interesting to watch the scenarios unfold in the Indian Automobile market.
First and the foremost, the main important question that has always been raised is, how is going to affect the two wheeler industry? Well that’s a really interesting and a debatable point. I have always been very keen to see how it’s going to unfold itself. With the introduction of the low price car, many feel its going to affect the two wheeler market. I have more than a couple of reasons to strongly believe it will not.
One main reason why I believe it is not going to affect too much is because as quoted by Tata, Rs. 1 lakh is going to be the dealer price (not ex showroom price) for the car. So lot remains to be added to it. VAT, excise duty, dealer margin, etc added on will give the ex showroom price. And on that one has to add the cost of registration, life tax, etc. So I don’t expect it, to create a hole in the buyers pocket less than Rs 1.4 lakhs minimum. And that’s only about the basic model. As the luxury increases, the cost escalates accordingly. A normal Indian two wheeler comes around a price tag of around Rs.50000. So I don’t think many people will pay three times more and go for a car, just because it is cheap.
Secondly, the fuel economy provided by a car. At best 25kmpl. That’s nowhere compared to what a bike will give. There are motorcycles in today’s market in India, which give 75kmpl also. So running cost in case of the car, can simply be taken as three times of that of a two wheeler. And mind you, the Indian public is very very damn sensitive about the fuel economy his vehicle gives. I even remember one of my friends, arguing with me, about a premium segment bike, something which is designed for power, pickup and style. Fuel economy is never a criterion while designing such bikes. But then, that point always remains in one corner of a general Indian's mind.
Thirdly, giving a car for Rs. 1 Lakh raises a lot of questions about the reliability and quality of the product. Though the Tata's have been known for quality and reliability, much remains to be proved. They have claimed that it conforms to the highest levels of safety standards; the real test is when the car hits the roads. Any number on tests on the software, or any number of accelerated tests is not at all comparable to what actually happens in the field. So frankly speaking, that’s one more reason.
Fourthly, let’s be a bit practical. Considering the scenario of traffic and roads in India, and the rate at which infrastructure is growing in comparison with the market, any fool will prefer to travel in a two wheeler (for regular use, not for picnic or time pass or once in a while trips). For the simple reason that, with a two wheeler, sneaking anywhere is far easier than a four wheeler. And definitely faster too. And then comes the bigger problem of parking. Two wheelers can be parked anywhere on the road, but that’s not the case with a four wheeler. So, the whole point is unless there is some way where these two issues are addressed, I don’t think anything significant is going to happen.
People have always argued that, as the country becomes developed, the number of two wheelers in the country will reduce significantly, and the number of four wheeler users will increase drastically. I too used to believe it to some extent. I recently came back from Kuala Lampur. True to some extent, I hardly found a two wheeler on the road. Everybody literally had a four wheeler. But then, Malaysia is Malaysia and India can never become that. For the simple reason that India is a vast country, with a huge population. With people of different cultural backgrounds, it’s really going to be difficult to integrate people. And with the sense of discipline what I have seen among Indians, I don’t see it happening atleast for the next 50 years. All the technological advances and all have only increased the gap between the rich and the poor. The rich may be increasing in the cities. The standards of living may have improved. Everyone may be having a TV or a computer or whatever these days. But then there are a different set of people living in the villages, who still travel on bullock carts even though he knows how to ride a bullet, people who still use oxen to plough their fields even though they know there is something called a tractor which can do the same thing faster and more efficiently. So it’s only that there are still people who earn less. There still are people who don’t have basic healthcare within a 5 km radius of where they live. So it’s simply not easy to integrate India and make it developed. And the politics and politicians we are having will ensure that it will never happen.
The major reason for the slump in the two wheeler industry happens to be availability of finance, which itself adds to the fact that the people here are not all that rich to buy a bike on their own. And the interest rates are booming so high, and recovery also has become more and more stringent. So that’s one and probably the only reason for the small decline in the two wheeler industry. The point is, even if someone buys a car, he will definitely have a two wheeler with him. If at all anybody is going to be affected by the introduction of this new low cost car, I strongly feel its going to be the small car manufacturers like Maruti and Hyundai, rather than the Two wheeler Industry as a whole.
5 comments:
Rightly said mate...Based on my own experience,even in a developing city like mangalore,the biggest headache of a car user is the non-availability of parking space wherever you go.Whereas use of a two wheeler does not lead to such problems.That again is one of the reasons why,people will still go for 2 wheelers.
Completely agree with all the points you have made in favour of a 2 wheeler over a 4 wheeler. But i feel the offer of a 4 wheeler at slightly higher price than a 2 wheeler is not such a bad offer for it to be rejected outright. So, I am sitting on the fence to see how the drama unfolds. Hope the actual movie lives upto the hype its trailers have created:)
INDIA strength lies in its youngsters!! And a 2-wheeler adds on to the COOL factor of the generation NEXt....
well written!!
@ Achyut
Thanks for the observations and comments first of all.
Well I am not denying the fact that the Nano won't run. I am only telling and stressing here that the introduction of the low cost passenger car is not going to affect the two wheeler industry. Even if someone has 2 cars in his house, he will definitely have one two wheeler for emergency and other petty works to be done.
Keep posting.
Cheers!!!
All i would say is ..
YOUTH = SPEED = BIKE
I dont think any well built youngster would like to drive a car, hiding his Toned-up body and hence cars WILL NEVER replace Bikes however cheap they get.
And with youth now going towards being health conscious BIKE commands a respectable proposition in the society.
So, lets critics say nething WE ROCK with our bikes.
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