Small cars, big problems

Nano could spell further privatisation of transport, more traffic congestion and pollution, and a violation of the imperative to promote public transport.

Nano, Tata Motors

THE utterly uncritical, unfailingly breathless and mindlessly euphoric manner in which the bulk of the Indian media reported and commented on the unveiling of Tata Motors Nano car will go down as a landmark. Not only did most daily newspapers treat this as a front-page lead, they also presented the Rs.1-lakh car as the dream of a billion people a triumph of the nation and the sign of a resurgent India, in the words o f Balbir Punj, convener of the Bharatiya Janata Partys intellectual cell.

Those who raised questions about the wisdom of promoting cars, big or small, were roundly condemned as misguided environmentalists, snobs and elitists who oppose the democratisation of private transport, which makes cars affordable for the lower middle class. They were abused as neo-casteists. An academic who has consistently opposed affirmative action for the Other Backward Classes even spun out theories accusing Nanos critics of having a Bourbon complex, recalling how Louis XIV jailed one of his ministers for entertaining himself more lavishly than the king. He then reeled out statistics to argue, extremely dubiously, that the number of cars in India is so small that it is almost embarrassing to reveal. This argument totally fails to note that this number is growing at double-digit rates, which are among the worlds highest, and that cars are already contributing in a big way to the environmental havoc that marks a majority of our cities. Nano is still months away from serial production, but the media depicted it as an almost-finished, all-but-ready-to-market product based on unprecedented technological innovation, which will revolutionise manufacturing practices across a range of industries through frugal engineering.

No Indian publication saw fit to interrogate or verify the Tatas claim that Nano is a safe, solidly manufactured and rugged vehicle that would not only meet the prevalent Bharat-II and Bharat-III emission standards, which are respectively 10 and 5 years behind the current European norms, but would also be improved to meet the considerably tougher Euro-IV standards, which are to be adopted in a little over two years.

No Indian journalist seemed to have contacted the numerous vendors of Nanos components to find out how frugal engineering was practised. Similarly, nobody asked what the costs of upgrading emission levels might be and how they would affect Nanos iconic price tag.

Again, in a bout of amnesia, all concerned treated Nano as some natural outgrowth of the market, which obeys the laws of supply and demand and follows the logic of competition. But the Nano project at Singur is subsidised and subsidies by definition are market-distorting.

According to Ashok Mitra, a noted economist and former Finance Minister of West Bengal, the direct subsidies are at least Rs.850 crore. They include the 997 acres of land acquired by the State government for about Rs.150 crore, a Rs.200-crore loan advanced to the Tatas at a nominal interest of 1 per cent, and an exemption from the value-added tax for 10 years, which is estimated to be worth Rs.500 crore.

In addition, reports The Statesman, the Tatas were given, as a special incentive, 50 acres of prime land in Rajarhat New Town just outside Kolkata and another 200 acres in the Bhangar-Rajarhat area to build information technology and residential townships. According to a Tata Motors press release, the Singur plant will have a built-up area equalling only 4 per cent of the acquired 997 acres. Tata Motors can earn more profits by leasing much of the remaining land to ancillary units.

Such was the medias fascination with the Rs.1 lakh price tag that it converted that number into a new measure or metric, much like the price of the McDonalds hamburger: so-and-sos monthly salary is worth 3 Nanos. But that superlatively attractive figure does not represent the purchasing power of most Indian families. Several less-than-10-year-old models of used cars in relatively good shape are currently available at a lower price.

Yet, Indias used-car market is only half as developed in relation to that of new cars as in the rest of the world. The reason is that it takes Rs.3,000-5,000 a month to maintain a car (including depreciation), which is well beyond the capacity of the lower middle-class family. Besides, even the basic model of Nano is initially expected to cost Rs.1.3 lakh-plus on the road. Ratan Tata himself hinted that this price may soon go up: We may not be able to hold the price emotionally. We have to understand that steel and tyre prices are rising.

A road in

So the four wheels for the masses slogan seems a bit premature. Nano might not yet be Indias equivalent of the Ford Model T, which gave the United States cult of the automobile a mass dimension a century ago.

Nevertheless, Tata Motors has succeeded in ruthlessly paring down Nanos cost to make it the worlds cheapest car. The upside of this is unconventional thinking focussed on frugality and minimalism although not necessarily on wholly new technologies: Nano does not use a new kind of engine, transmission or other sub-assembly. More ambivalently, such frugality may encourage excessive electronic sourcing, which uses Internet auctions to force suppliers to compete.

This would be a break from the carmakers tradition of cultivating a long-term relationship with suppliers, which makes for reliability. Globally, most efficient car makers source no more than 10 to 15 per cent of components electronically. But Tata Motors is buying 30 to 40 per cent through Internet auctions.

The real downside, as reported by The New York Times, is the stripping down of costs in ways that could affect the cars longevity, ease of maintenance and, possibly, safety. For instance, Nano has a hollow shaft instead of a solid beam to connect the steering wheel to the axle, and plastics and adhesives in place of many studs and bolts.

The cars wheel bearings will wear out rapidly beyond the speed of 70 km an hour. Although its windshield is nearly as broad as the Maruti 800s, it has only one windshield-wiper instead of two. Nano uses belt-driven continuous variable transmission, which slows down acceleration. To save merely Rs.400, the suspension was redesigned to eliminate devices called actuators, which adjust the angle of the cars lights to the way it is loaded.

Such measures are likely to impact the cars safety, sturdiness and durability/longevity. The full impact will only be revealed once the car has been on the road for a few years. Fixing these problems is likely to raise the price of the car.

The cost implications will be especially severe once India makes certain long-overdue safety standards mandatory, including the full frontal crash test which determines how cars will crumple in collisions airbags that protect passengers from the impact of a crash, and anti-lock braking systems. These alone will raise costs by as much as Rs.40,000-50,000, estimates Anumita Roychowdhury of the Centre for Science and Environment (CSE) in Delhi.

Michael Walsh, a pollution consultant and former U.S. Environmental Protection Agency regulator, has been quoted as saying that a car as cheap as Nano is likely to lack the complex technology needed to maintain its initial level of emissions and could soon produce 4 to 5 times more pollution. It strikes me as impossible that such a vehicle will be a very clean vehicle over its lifetime, he told The New York Times.

Even assuming that Nano is, or eventually becomes, a clean vehicle, it will have set a trend under which the industry exploits our existing poor emission and safety standards and rushes to establish a fast-expanding market for ultra-cheap vehicles. Bajaj has announced a Rs.1.2-lakh car. Volkswagen, Nissan and General Motors are also considering plans to make stripped-down cars priced below Maruti 800.

Ultra-cheap cars will flood Indian roads before new emission regulations are put in place in April 2010. This spells a high and unacceptable increase in pollution and related health effects, with their huge toll on society. Of the 90 cities that the Central Pollution Control Board monitors, 57 per cent have already hit critical levels, with particulate matter concentrations exceeding 50 per cent of the permissible limit. Another 13 cities have begun to show an increase in nitrogen dioxide concentrations related to vehicular pollution.

To this must be added the costs of congestion on our roads, which are already causing a loss conservatively estimated at Rs.3,000-4,000 crore a year. According to the CSE, Indias urban population has grown 4.6 times since 1951. But the number of vehicles has risen by a mind-boggling 158 times. It took India 50 years to reach the three-million mark for personal vehicles (in 1981). In the next 10 years, the number rose by 14 million and in the following decade, by 28 million. Between 2001 and 2004 alone, India added 16 million vehicles.

This has led to more than a doubling of the peak traffic volume and greatly slowed down average vehicular speed. Slower vehicle movement means higher emissions. Thus, in Delhi, average speed plummeted from 20 to 27 km an hour in 1997 to 15 km in 2002 and now crawls at 10 km. In Mumbai, it dropped from 38 km an hour in 1962 to 15-20 km in 1993. In Chennai, the average speed is 13 km an hour and in Kolkata, an abysmal 7 km an hour.

The real trouble with promoting cars such as Nano is that they will make people more and more dependent on private transport when the priority is to develop safe, efficient, affordable and reliable public transport.

Cars are the most inefficient, expensive and polluting mode of road transport ever invented. In India, they occupy the lions share (75 per cent) of road space but meet less than 5 per cent of the travel demand. Buses, by contrast, occupy a mere 5 per cent of road space but deliver up to 60 per cent of commuter trips.

Shamefully, however, the government refuses to recover the full cost of ownership and use of cars although their ownership is a minuscule seven vehicles for every 1,000 people. The cost of the land on which roads are built, and the cost of their construction and maintenance add up to several thousands of rupees per square metre (in metropolitan centres, one order of magnitude higher). But car owners get to use them virtually for free.

The lifetime road tax on cars works out to a laughable national annual average of Rs.300. The government taxes buses 43 times more heavily, at Rs.13,000. According to a World Bank report, the total tax burden per vehicle-kilometre is 2.6 times higher for buses than for cars. This is doubly perverse, given that a car consumes almost six times more energy than a bus per passenger-kilometre.

The government grants free parking space to cars, usually 20 to 25 square metres while it treats poor slum-dwellers occupying even less space as trespassers worthy of summary eviction. Why, it even builds multilevel parking in busy areas, costing roughly Rs.10,000 a square metre! If its costs were to be recovered, a car owner would have to pay at least Rs.50,000 a year. He or she only plays a fraction of this sum. The rest is a subsidy for the already privileged.

Building more roads is no solution. For every 10 per cent increase in road space, there is a 9 per cent increase in traffic. Building flyovers is expensive and counter-productive. It further subsidises private transport, especially cars. Yet, we are building hundreds of flyovers and ripping up our city centres.

The ultra-small car lobby is now gearing up to demand budget subsidies in the name of the common man. This deception must stop. Car owners must bear the full cost of their extravagant, polluting and unsustainable means of transport, and the public must get access to safe, environmentally sound, efficient and cheap transport. Or else, we will have no urban future.