Tatas on the fast track with Rs 1-lakh car plan

Tata Motors is working on some interesting initiatives for its Rs 1-lakh car that is scheduled to debut next year. The top management had a meeting with vendors last month to apprise them of the project. They are now getting ready to set up shop in Singur despite initial apprehensions on the location.

The car will also have an 800cc diesel option in addition to the originally planned 624cc (33bhp) petrol engine version. Similarly, the user will have the choice of a manual and automatic model. It is not clear, though, if the diesel version will be offered at a later date. Indications are that it will be priced closer to Rs 2-lakh. As for the size of the car, its length is 3100 mm, width 1495 mm and height 1600 mm. The wheel base is 2230 mm and the manual steering could give way to power steering at a later date depending on market requirements.

The company has proposed an 18 month warranty or 24,000 km whichever is earlier and believes that the annual use of the car will be in the region of 5000 km. It is Tata Motors’ objective to achieve 100 ppm in the initial stage of production. While the car is scheduled to roll out of Singur by the first half of next year, suppliers are of the view that this is an optimistic target. They believe that valuable time has already been lost and the car will debut only by the end of 2008 at best.

The top management of Tata Motors is reportedly keen to have the vehicle showcased at the Delhi Auto Expo next year and this should not be too much of a problem. Apparently, this month will see 20 prototypes ready, going up to 25 in June and 30 in July. The company has also conveyed to vendors that production will begin with three lakh cars, going up to five lakh and, finally a million. The initial capacity at Singur will be 350,000 units on a three-shift basis.

TWIST IN THE TALE

As is well known, this will be the mother plant and Tata Motors intends to have satellite operations across the country where entrepreneurs will receive CKD kits from Singur and assemble them. This is where there could be an interesting twist in the tale. Uttarakhand, which will be home to the successful Ace, is also expected to have an assembly line for the Rs 1-lakh car. In fact, reports have been doing the rounds that this will go hand-in-hand with the schedules at Singur and numbers could be to the tune of 75,000 cars initially.

##### Should this be the case, the idea is to obviously service the northern India market from Uttarakhand apart from capitalising on the fiscal sops being doled out to manufacturers by the state government. The plant is humungous (Bajaj Auto is practically next door) and there is enough space to accommodate additional assembly lines.

The top management is aware that this is one of its biggest challenges especially when it means creating a market for a million or more for such small cars. In the next five years, Tata Motors hopes to have a vehicle capacity of 2.5 million units. Given that it was barely 600,000 units last fiscal, this is an ambitious objective and the Rs 1-lakh car will clearly have an important role to play as a growth driver.

For the record, the company is targeting 725,000 units this fiscal. The investments proposed over the next three years are to the tune of Rs 15,000 crore by which time the new facilities at Singur, Uttarakhand and Ranjangaon (where it has tied up with Fiat to make cars and powertrains) will be up and running. Further, a new plant for buses with Marco Polo will also have been commissioned and the location is tipped to be Dharwad, Karnataka.

Apart from this, Tata Motors has aggressive plans for the global market and has already announced its intent to manufacture its Sprint pickup in Thailand. Plans are also underway for commissioning facilities in South Africa and Russia.

FIAT COULD CHIP IN

The tie-up with Fiat is expected to play a big role in the global foray and there have been talks of the company also doing its bit for the Rs 1-lakh car. What this will eventually lead to is not entirely clear yet. The challenge for vendors is to ensure that they cope with the huge numbers planned for the car. A million units by 2010-11 will change the dynamics of the compact car market and could even prompt other carmakers to join the bandwagon (see box). It will be interesting to see how this will impact the two-wheeler segment.

MURALI GOPALAN