Waiting for the Tata Nano

Why should you buy the Tata Nano ?

The Tata Nano fits the budget for a small first/additional car. Taxes and insurance will not add much to the overall price of the car.

It is a definite improvement in safety and convenience over a two wheeler

It is the best size for crowded city streets and for peak traffic.

It gives good mileage (supposedly around 20 km/l)

It will be easy to park due to its size.

It will be easy to maintain due to the wide reach of Tata dealerships.

It will have reasonable maintenance costs since the input parts itself are capped within the 1 lakh mark.

The cost of parts for the Nano will come down drastically after around 2-3 years with mass volumes appearing. (I am very curious to know what kind of warranty would be provided by Tata for the Nano. An extended warranty, if provided, would have me signing up for it even on day one. I have the benefit of the extended warranty on our current cars and have seen the benefits. I’ve also seen the amount of money one can burn if you don’t have the extended warranty.)

If there is an option with an auto transmission it may be the best option for a driver not comfortable with driving in the city or novice in driving

Most cars depreciate almost the second you sign the papers paying your advance amount for booking it. In this case the Nano due to its high demand will not depreciate as much as other cars and as soon as the others. As it is most used car dealers are worried about being able to sell used cars at prices between INR 80,000 to 2,00,000 as most people when given that kind of budget may take a serious look at the Nano instead of a used car.

You will be able to buy a new car for around 1.25 -1.5 lakhs and still be able to spend even up to 30,000 rupees in accessorizing the cars. I am waiting to see a pimped out Nano with oversized alloy wheels and low profile tyres blasting out tunes painted in garish colors and with all possible spoilers and extra fittings in chrome added to it!

The diesel version will make people look at the Nano very closely. The price of the diesel Nano would in theory undercut all other possible new diesel vehicles.

The Nano will shake up the entry level new car market, the used car market and the 160cc or higher segment of bikes. Even regular commuter bikes will be affected because of people tightening their belts and taking loans to buy the Nano instead of the bike they would have originally gone in for. Recreational/cruisers and superbikes, of course, will not be impacted. 

Why look at other options than the Nano?

The huge used-car market is waiting for the Nano to come and slash their prices. The options of getting a bigger though used car for around the same price is something I would really consider.

The limited production scheduled for the Nano and the associated wait times for delivery.

The obvious price gouging waiting to be done by all the Tata Nano dealerships – make 5-10 thousand on the customer demand.

The wait for the guaranteed first-batch production defects to be sorted out. Personally most auto manufacturer insiders would avoid buying cars made in the first six months of production due to issues that will definitely show up. Version 2.0 would definitely be more stable.

Other options would open up the moment the Nano launch hits like a stripped down Maruti 800/Alto. Hyundai also would probably come up with a low cost version of the Santro just to make sure that they do not lose market share to Tata. The Nissan-Renault Alliance with Bajaj may also be a key competitor to the Nano.

The economy being what it is – buying a new car isn’t something people may to do for at least another 1-2 years. Salaried employees who have budgeted for a new car in this range and have the funds to spare may still go ahead but those that have to take a loan to buy this car are better off waiting. If interest rates for car loans especially for the Nano are low, then many may be tempted to buy it. As job cuts and pay cuts are all over the place, Nano sales may be good initially, but will taper off and run parallel to the markets.

Questions the Nano launch will pose:

Would the taxi-wallahs and auto-drivers of the nation move to the Nano as the next iteration of the Fiat/Ambassador taxi and the Bajaj Auto ? I can already see the Nano driven at breakneck speed
with “Call-taxi” signs all over it.

Would traffic increase like anything ?

Will accidents increase manyfold ?

Would regular bikes/two wheelers stop getting sold in India or become a niche ? (for example in the USA – very rarely does one find two wheeler riders – most people drive cars – however old/decrepit the cars may be.

Would road rage increase ?

Will accessories prices comedown (for stero equipment/LCD screens etc ?)

When the diesel version comes out – will the subsidy on diesel will be stopped. Diesel and petrol may become on par on cost – just the benefit of a more fuel efficient engine would be there for diesels. Car manufaturers no longer can charge diesels as much costlier than petrols.

What will happen to the used car market for B,B+ segment cars ? Will there be buyers for used small cars like the 800,alto,zen,indica etc ?

What used-cars can I get for around 1 lakh in the market today?

(A sampling from some used-car portals for Chennai city)
Have listed the newest cars one can buy for around Rs 1 lakh:

 

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