Tata Nano Take Congestion to Tier II & III

Tata Nano is the much awaited car to be launched in India and when the ‘mini car’ was launched earlier this year, credit rating agency CRISIL estimated Tata Nano could expand the Indian car market by 65% and increase car sales by 20% over previous year.

As per the data collected by KPMG from the society of Indian automobile manufacturers (SIAM) and CRISIL shows that in the landmark year of 1998-99, when a bevy of other auto-companies entered the small car segment, Maruti 800, the first and only A1 small car model, held a 58% market share.

Later with the introduction of a range of A2 compact car models - larger than A1 and a good Rs.2-5 lakh more expensive - the share of Maruti 800 fell to 5.8%, to be replaced in popularity by A2 cars whose share had increased to 72% by end of 2008.

Mr. Krishnan said "The A2 models created a metro-based upwardly mobile market segment." "But, the Nano, actually an A0 car, moves further down the pyramid, where the market is also wider." By bringing down the cost of ownership to less than three times that of a two-wheeler, it captures the aspiration, but cost sensitive market in tier II and III towns.

Dr N S Srinivasan, former head of the transport and transportation division of the Central Road Research Institute, estimates the growth of car traffic in central business districts (CBDs) of cities alone was six per cent during that period. Talking about the crowded roads he said "Whereas, the capacity of roads in CBDs to handle such volume has grown only negligibly”. "This is because, it is not possible to widen city roads owing to building constructions, and there is a limitation to construction of flyovers."