Tata Motors Nano has done more to car manufacturing business than any government policy so far. It has given a fresh hope to millions of Indians to own a car. The industry estimates that the domestic passenger car sales market could go up significantly. CRISIL, a leading credit ratings and research company, has said that the Indian car market size could increase by 65 percent - all because of the Nano.
The world’s cheapest car could drive car sales by 20 percent within a year. The tiny car could be available to middle-class families at just Rs 1.3 Lakh to Rs 1.4 Lakh. Until Nano was introduced, Maruti 800 was claimed to be the world’s cheapest car priced at $5,000. The CRISIL research report says the cost of ownership for first time car buyers has gone down by 30 percent. The ratings and research company has stated that 50 Lakh two-wheeler owners are likely to upgrade to Tata Nano or Bajaj Lite. The taxi drivers and BPO cab vendors will also be able to increase their fleet with very low capital investment. Unemployed youth could now get employment as taxi drivers or as cab vendors.
Auto drivers could upgrade and become taxi drivers given the low cost of the ownership. Also, a large number of graduates recruited for fancy salaries in the booming IT and automotive markets would definitely look at upgrading to a four-wheeler compared to an expensive two-wheeler keeping safety in mind.
The entry level car will be available first throughout the smaller cities through Tata outlets, which have already penetrated deep into the heartland. Even while the threat of traffic congestion looms large with the introduction of Nano, market forces cannot be contained. The only hope is that the government devices better roads and a more systematic traffic system that will help maintain a smooth flow of traffic at most times.