$2000 CAR FROM INDIA SLAMS NORTHERN AUTOMAKERS’ RENT-SEEKING

Erle Frayne D. Argonza

Good morning from the suburbs south of Manila!

To continue with our exciting news for the ‘ember’ months, let me share some reflections about the recently released people’s car from India. The array of new innovations goes longer than that, with the car serving as the icing in the cake.

Beth Day Romulo, international journalist who’s the other half of the late Carlos P. Romulo who is one of Asia’s greats in the foreign policy field (former President of UN), featured the Nano car in her regular Sunday space at the Philippine Panorama, dated July 25, 2010. The Nano was engineered by the giant Tata group of companies of India, and sells at a very affordable $2000 apiece.

As Beth Day Romulo aptly titled, “In India, cheap doesn’t mean shoddy.” A sleek yet classy looking prototype, the Nano would surely be an envy of many countries up North who just couldn’t think of a car unless it sells past $25,000 apiece. Accustomed to the corrupted status-seeking behavior, the North’s customers would do everything in the books (e.g. get credit) to acquire flashy Mercedes Benz or Porsche and brag the same to their family circles and peers.

Mass markets are the in-thing in automotive industries as far as the bankrupt or near-death Northern car manufacturers are concerned. Flashy cars & SUVs would be okay for the fractional upper middle class markets up North and their clones down South, but for the larger billions of workers & professionals in emerging markets utility is the yardstick, hence the affordable folk car suits them well.

Before I venture into other thoughts, let me declare my own deep admiration for the Tata Group over its feats across the decades. I encountered this group during my own research on the steel industry in the late 90s, and in 1999 their representatives presented papers in the Manila-held conference of the Asian Iron & Steel Institute (I participated in that conference held at the Shangrila Plaza in EDSA).

From Tata Steel to Tata metallurgies and now to automotives, what can I say but SALUTE! With top-of-the-line scientists among their design innovators, including the world-renowned steel expert Dr. Mukerjee, the only way for Tata to go is to jettison upwards in a very exponential fashion.

What the Tata Group is silently proclaiming to the world is that the price policy of Northern car makers is pure and plain rent-seeking practice. Look at the Volkswagen beetle for instance, a people’s car that is now priced at past $23,000 apiece, and that surely makes one have doubts about the ‘people’s car’ facet to the Volkswagen.

It’s all pure and plain rent-seeking. Profiteering is a more palatable term for the layman. Just like those Western pharmaceuticals that are produced for a mere $0.01 apiece but sell for over $1 per pill, rendering the pharmaceutical companies the top-gun of obnoxious rent-seeking firms.

I wouldn’t be surprised if we’d find out that a people’s car up North should be selling at merely $4000 apiece, using factors of production costs in their own backyards. A Beetle should be selling at $3000 or even lower, come to think of it.

At any rate, the peoples of the emerging markets have lives of their own, and they set the patterns of consumption on the basis of their own needs. Such as the need for utility cars that are truly ‘utility’ and not luxury items masquerading as utility.

As per report, the German engineering company Siemens had jumped the gun, by committing to mass produce and market the Nano in India, China, Russia, and Brazil. The Mumbai subsidiary of Siemens alone will produce half of the Indian innovations (Nano’s just one of them) that they’ve committed to produce and market.

As Beth Day Romulo reported, “While western engineers work on highly sophisticated products, the Indian engineers, who focus on high quality but low cost, aim at simplification and adaptation to the environment.”

Stressing on the infusion of social technologies to the engineering works, Madam Romulo concluded that “all of those devices and products are the result of local innovation, the engineers on the ground who study and recognize the needs of the Indian consumer.”

Not just the Nano car but also a whole array of innovations from India have been showing the way to the fusion of quality and consumer sensitivity in the product prototypes. This is what true development should be in terms of technological innovations: driven by people’s needs rather the pockets of greedy corporate executives and owners.

[Philippines, 02 September 2010]

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