22 June 2007
Anyone wishing to escape the human crush of India's teeming capital to visit the marble splendour of the Taj Mahal can travel by train in just two painless hours. Alternatively, they can struggle to negotiate the crowded single-lane road that heads south to the city of Agra in a journey that can take up five hours.
But if India's roads seem cluttered and inadequate, things are set to get much worse. Over the coming months, a series of car manufacturers are set to unveil new models aimed at India's burgeoning middle class. Remarkably, some of the new cars designed to entice the wallets of India's newly wealthy consumers will be priced as cheaply as $3,000 (£1,500). One model, due to be available as early as next year, has been dubbed the "People's Car".
This explosion of new affordable vehicles is poised to have a number of dramatic effects on the country - most visibly adding further traffic to roads that are often filled with rickshaws, bicycles, people and animals.
Yet while consumer demand for such vehicles is high, there are also considerable concerns about the environmental impact these countless thousands of new cars will have, not just in terms of adding to the congestion of India's cities, but increasing the already mounting emissions of CO2 the country is pumping out.
"Sales have been increasing year by year," said Himanshu Tandon, the general manager for sales at a Hyundai dealership in Delhi. "It's basically the middle class. Loans are getting easier now, banks are making it easier to get better rates, and more and more people are going for it. In India, the growth in sales has been in the small-car sector.
"It's not about [status] - it's about necessity. People require four wheels, with A/C. They cannot go on a bike or scooter anymore. It's entry level cars. Larger cars are for people with extra money. The first car is always a small car."
Though India's roads are often jammed with motorbikes and three-wheeled auto-rickshaws, its total number of cars is very modest by world standards. Figures suggest a vehicle density of just seven cars per thousand people. By contrast, the US has 477 vehicles per thousand and the UK has 373.
Yet while such a figure gives India a total of fewer than 10 million cars, the number of sales is rising extraordinarily. Last year saw a total of one million car sales and every year the number of cars being registered in the country is increasing by 16 per cent. In recent years, Delhi alone has seen about 200,000 new cars being registered every year. Last year was exceptional - a total of 300,000 new cars were registered. And such figures only include those vehicles being driven legally. No one doubts the demand is high. The first company to look to tap into this new market was Tata Motors, the vehicle arm of the powerful Indian conglomerate which saw revenues of more than $20bn last year. Established at the beginning of the 20th century by the businessman Jamshedji Tata, today's company, headed by Ratan Tata, has operations in more than 40 countries around the world. Among its most successful enterprises is its auto manufacturing division, which is the largest in India and the world's fifth biggest producer of commercial vehicles.
It was back in 2003 that Mr Tata announced his plan at the Geneva Motor Show to produce a car for 100,000 rupees (£1,200). Instantly, the concept captured the public imagination and very soon the prospect of a one lakh car - a lakh being the term for 100,000 - soon became the chatter of the automotive industry.
Elements of the industry were sceptical. In a market where the cheapest entry level car was priced at 200,000 rupees, how was Tata going to produce a car that cost half that? Yet its chairman was adamant. In 2005 he insisted that the car would be ready in just three years, and added: "It will also not be a stripped-down car. It will be an inexpensive car."
Reports in the Indian media suggest that if, or when, the car does appear next year, its price will have nudged up to 125,000 rupees. But Tata will still have pulled off something of a feat. In fact, so much so that other manufacturers are following suit.
This week it was revealed that at least four other car manufacturers are targeting the booming Indian market with vehicles aimed at first-time buyers and costing about $3,000. On Wednesday, Nissan-Renault became the latest to reveal its plans for such a vehicle and said it would probably be produced in India. "We will be part of this competition," the chief executive, Carlos Ghosn, said.
"We are investigating, at the level of the alliance, how we can make a $3,000 car ... The very likely situation is, if we build a car like this, it will be done in India because the suppliers are there, the plants will be there, and the environment in India would be very favourable to a frugal product definition and to frugal engineering and manufacturing."
Nissan-Renault is not alone. The Indian firm Hero Group, best known for making motorcycles, is said to be working on a mini-car, possibly in conjunction with a Canadian company; Maruti-Suzuki is developing what it says will be a "competitively" priced 660cc car; while the southern India-based Bajaj Auto says it intends to reveal its model for the entry level market at the country's 2008 Auto Expo. The Times of India even reported this week that a low-cost computer manufacturer, Xenetis, also has plans for a budget car.
It was the Indian economist Coimbatore Krishnarao Prahalad, in his 2004 book The Fortune at the Bottom of the Pyramid, who reminded companies of the profits to be made - and, he alleged, the two-way flow of benefits to be gained - by focusing on the world's poor and by producing goods they both wanted and could afford. He argued that even if profit margins were tiny, the sheer numbers of products being sold could generate a sufficient amount to make it worthwhile. He argued, too, of the benefits to the poor, who had long been ignored by manufacturers.
The 100,000-rupee cars are certainly not being aimed at India's poor, but even if the profit margins are limited, the number of sales is likely to be considerable. Tata says it is preparing to produce 250,000 People's Cars in its first year of production. Given that India's middle class is considered the biggest in the world - perhaps numbering 300 million - the prospect for sales is enormous.
Manufacturers such as Tata claim they are not oblivious to the environmental repercussions of these new cars. A spokesman for the company said Tata also produced buses used by public transport systems and that its new small cars will have low emissions per passenger. However, a spokesman said: "Tata Motors believes that people must have all options - of both personal transportation and also public transportation."
But environmentalists say these new vehicles represent a massive new threat to India's well-being that has not been fully appreciated. They argue that rather than being lured by transport policies of the West, India must continue to focus its energies on public transport, which is not only less environmentally damaging but is also much more affordable - a key issue in a country where 300 million people live below the poverty line.
"What we are really worried about is the congestion and the pollution," said Anumita Roychowdhury, an associate director of the Centre for Science and Environment, a Delhi-based environmental group. "In Delhi, public transports manage more than 60 per cent of the transport demand and, if you add the numbers using the new Metro, that is going to increase the [percentage using public transport]." She added: "Our immediate policy should be to retain and protect this so that people who are already using it ... do not make the move to cars. It is aspirational - people who want to buy cars. But the question should be how easy should we be making it for them?... Once they have started using cars it, will be hard to get them back."
This warning from environmentalists comes at a time when the newly emerged economies of India and China are facing increased international pressure over carbon emissions.
It was confirmed yesterday that China had now overtaken the US as the world's leading emitter of CO2. Meanwhile, India - currently the world's fifth largest emitter of CO2 - continues to insist that it will not take action to limit its emissions unless the industrialised countries of the West - including the US - agree to legally binding limits.
Before attending the recent G8 summit in Germany, the Indian Prime Minister, Manmohan Singh, said: "Due care must be taken not to allow growth and development prospects in the developing world to be undermined or constrained ... More and not less development is the best way for developing countries to address themselves to the issue of preserving the environment and protecting the climate."
And India shows no signs of turning away from its new-found love affair with cars. Indeed, the country's Transport minister, K H Muniyappa, recently announced that plans for the completion of the Golden Quadrilateral - a huge highway project that will link the cities of Delhi, Bombay, Calcutta and Madras - were on schedule for 2009.
It is exactly these new roads that the People's Car manufacturer and others have in mind as they seek to persuade an entire new class of Indian motorists to get behind the wheel and drive.
http://environment.independent.co.uk/climate_change/article2692472.ece
