How will rivals react to the Nano?

23 March 2009

Sceptics have questioned the feasibility of the Nano almost from the start – they feel that the announced price of Rs1 lakh (just under $2000) is simply too low to make a car of acceptable quality.

However, the very fact of its ultra-low price has stirred and shaken the auto community internationally; and demonstrations at auto shows have proved that it is not just a glorified two-wheeler. Competitors like Maruti Suzuki and Hyundai Motors have been forced to take notice.

The delay in the launch of Nano may have come as a blessing in disguise for Tata Motors, because petroleum prices have shrunk in recent months along with the prices of raw materials, especially rubber and steel.

As the Nano hits the road, the reaction of Maruti Suzuki, India's biggest seller in the 'entry level' car segment, will be the most keenly watched. Its two hot-selling models, the Alto and the venerable M-800, both cost over Rs2 lakh.

Recent reports suggest that Maruti could rework its largest selling model the Alto. Given a facelift and a price tag under Rs2 lakh, it could make potential Nano buyers think twice – particularly as Maruti has an excellent track record, while the Nano remains untested on the Indian roads.

Hyundai, the second-biggest seller in the market with its Santro, has announced that it plans to come out with a small car for India and China priced at around $3,500 (Rs1.77 lakh), while two-wheeler major Bajaj Auto has said that its ultra small car project is on track for the scheduled rollout in 2011.