July 27, 2020
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A Dreamcar Named Desire

Ratan Tata has bet his largest company on the small car. Take a deep breath now.

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A Dreamcar Named Desire

This had been the most eagerly awaited moment at Auto Expo '98. The moment when the music would soar to a crescendo, the laser show reach its climax, and the protective dome hiding the car would be lifted. Minutes before, industries minister Murasoli Maran may have gone a bit overboard when he said: "It is the Kohinoor of India and will turn a new leaf in India's history." But when the dome lifted, and the electric blue car became visible, there was a collective gasp: what the audience saw was beyond anything they had expected, despite all the hype. "It is a moment of pride for all Indians," said Maran. For Ratan Tata, it was the "culmination of a movement, a dream".

The admiration came from almost everyone who matters in the Indian automobile industry—Maruti Udyog's R.S.S.L.N. Bhaskarudu, Daewoo Motors' S.G. Awasthi, Hindustan Motors' C.K. Birla, and Bajaj Auto's Rahul Bajaj. Eyes were being rubbed all around.

The car (Indica—from Indian car, Mint—from Mini Tata car, whatever...Telco hasn't taken a decision on the final name) on first view: 20 per cent longer and wider than the Zen so three people can sit comfortably at the back; looks: stylish, with a sense of power; lots of headroom, luggage space, sexy dashboard, rear lights high up on both sides of the back windscreen.

Specs: to be launched in two versions—standard and luxury, and diesel and petrol. A 1,400-cc four-cylinder engine with a maximum power of 54 bhp for the diesel and 60-65 bhp for the petrol version. That's a lot more power than the Maruti 800. Five-speed synchro gears, around 16 km to a litre. The luxury version will have power steering, power windows, rear windshield wiper. In short, the works.

Price: basic version at Rs 2.5 lakh, luxury Rs 50-60,000 more. Quite incredible. To be launched: late October-early November.

It's been five years since Ratan Tata read aloud his dream of a fully Indian budget car at the Telco AGM. But Tata did not want just a small car. He wanted one that would have the swanky exteriors of the Zen, the spacious interiors of an Ambassador, the fuel efficiency of a diesel engine and the price efficiency of a Maruti 800. Above all, it was to be fully Indian.

"The brief given to us was that it has to be a small car with big features, both in facilities and performance," says an engineer from the design team. And better than the monopoly small car, the Maruti 800. So Telco delved deep to track every dissatisfaction point of Maruti customers. That was the starting line. "We were asked to design a car which would compare favourably with the 800 in all possible aspects," says the engineer.

Working hand-in-hand with Telco was the Turin, Italy-based design institute IDEA. But while the Telco design team was given three guidelines: space, fuel efficiency and India, the IDEA team was told: safety, reliability and aerodynamics. From September 1995, the two teams met every month and after a merger of their design concepts and several permutations, the current design was arrived at.

Safety was one of the key aspects "as observations had shown that the Maruti was light, flimsy and unsafe". So stringent safety norms were laid down. The car went through computer-simulated crash tests to test its survivability. This will now be followed by physical crash tests of not only the front of the car (as is usually done by all automobile manufacturers), but also the sides and the ceiling. The car would have front, side and top impact beams for passenger safety. And air bags? Not at the moment, to keep the prices down, although the provision is there.

And who's the target customer? "A Maruti 800 buyer who is eager to spend a little more and a Zen buyer who wants to spend a little less."

So will it work? There is a lot that we don't know yet. For example, the sheer engineering aspect—the engine, the suspension, the all-new chassis and the performance. Telco is still working on fine-tuning these aspects. Is the body overweight (at about 900 kg, it weighs the same as a Maruti Esteem which is a much bigger car)? Telco's advantage is its widely spread out dealer network as well as its service and spare parts network all around the country, which can take care of the needs of the small car, something which newcomers Hyundai and Daewoo will take years to put in place. But the moot question: Will Telco's truck dealers be able to service the passenger car customer, a totally different kettle of fish? Also, globally, very few companies have been able to develop truly good small cars. Even the great Daimler-Benz has had to recently recall thousands of its A-class small cars from the market after it was found it had a balance problem.

Telco's bills on the small car project will finally add up to Rs 1,700 crore. That's cheap for the scale of Tata's ambitions, but nonetheless a very large figure. Tata says he breaks even with sales of 60,000, but this figure could finally go up to 80-90,000. Even if the car fails, says Tata, it won't matter, because he's had the plant designed in such a way that it could also be used to manufacture trucks. But.

Telco has been one of the worst sufferers of the current industrial slowdown. The commercial vehicle segment shrank by 16 per cent in 1997. Telco's sales slumped from 51,000 in April-November 1996 to 35,000 in April-November last year. This year, the scenario is no better with the company piling up huge inventory. So if the small car fails, Telco could be left with massive unutilised capacity, apart from the money down the drain, and a serious loss of face. The company could take years to recover from the blow. Foreign institutional investors Outlook contacted said that they would still rather wait for truck sales to pick up before picking up large chunks of Telco stock.

With his small car, Ratan Tata has taken one of the biggest gambles in India's corporate history. If he fails.... But if he succeeds, it will make you a little bit prouder to be an Indian.

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