India's Nano, A Cold War Casualty?

Friday, October 14, 2011

By Ed Hancox

According to a report in Foreign Policy, sales of the Nano automobile in India have been disappointing.  Launched with great fanfare just two years ago and billed as the “world's cheapest car”, the Nano has been equal parts savvy marketing campaign and act of social responsibility on the part of its creator, Tata Motors.  A marked transition has been underway in Indian society as the population becomes more affluent and more urban.  Unfortunately, the infrastructure of most Indian cities has not been able to keep up; roadways in many urban centers are habitually jammed, chaotic masses of humanity.  Among the cars, trucks and buses plying the roadways of India's cities are swarms of mini-bikes madly weaving through traffic, often carrying two, three and sometimes four riders; for lower-income Indians, a motorbike is typically the only motorized transportation they can afford.  Tata, which in India has a strong sense of social responsibility, took at look at the transportation situation and thought that a rudimentary car would at least offer these Indians some protection in traffic - certainly more then they would have perched on the back of a motorbike.  Tata set out to build an extremely low-cost car, one that would be within reach for many newly-urban Indians, the result was the Nano.  While it may look like the unfortunate result of a drunken union between a Volkswagen Beetle and a shopping cart, the Nano does provide its driver with four wheels and an enclosed body for the equivalent of just $2,200.  Tata expected to be selling 100,000 Nanos a month to car-crazy Indians; in reality they have been moving only about 1,000 units per month.

So what happened? I'll suggest that the Nano has turned out to be another casualty of the Cold War, yes that Cold War - the struggle between the United States and the Soviet Union and that has been over for 20 years now.  Much has been written about the decades the US and Soviets spent engaged in the Cold War: the battles, like Vietnam fought by proxy forces; the political intrigues; the ideological struggles; but at the heart of the Cold War was one simple question: how do you want to live your life?  The Soviets pushed forward an idea of Communist egalitarianism, a world without class distinctions where everyone was equal, at least in theory since the reality for some high-ranking party officials proved George Orwell's line from Animal Farm: “all animals are equal, only some are more equal than others,”  to be true.  The United States took the opposite tack, promoting the power of the individual, and that the outward reward for this rugged individualism was the ability to acquire material goods.  A social contract was implied: work hard and you too can have the American Dream - iconically represented by a house filled with modern goods, a yard surrounded by a white picket fence and a new car sitting in the driveway.  In 1959 the US literally brought this version of the American Dream to the Soviet Union, building a mock suburban house in Moscow as part of the American National Exhibition, which sparked one of the Cold War's more surreal moments, the infamous “kitchen debate” between Vice-President Richard Nixon and Soviet Premier Nikita Khrushchev.  For decades, American media – our movies, television, music, magazines – pushed the image of the American Dream to every corner of the globe.

Nixon and Khruschev, Kitchen Debate, 1959And it worked.  Blue jeans and rock-and-roll records became the tools of subversion inside the Soviet Bloc, the very embodiments of Western materialism and decadence (or so the Politburo claimed).  When the Berlin Wall fell, those East Germans who didn't flee for the West outright traveled over before returning East with as many Western goods as their little Trabants could carry.  Russia went from being the cradle of global Communism to home of some of the world's richest men, and most ardent capitalists, in the two decades since the end of the Soviet Union.

The problem today is that the United States did too good of a job in winning Cold War. Twenty years after the end of the ideological struggle, people around the world still clamor for their own piece of the American Dream, this is especially true in the developing world.  After decades of seeing the American Dream presented to them as a sort of nirvana on earth, as people in the developing world become upwardly mobile, they develop an insatiable taste for consumer products and the Western consumer-driven lifestyle.  They have internalized the message implicit within the American Dream, the one that dates back to our Calvinist forefathers – that material goods are an outward sign of your value as a person, simply put: the more you have, the better you are.  In the developing world today, no one wants to be thought of as not being as upwardly-mobile as their peers, and that's what has hurt the plucky little Nano.  While Tata could be commended for attempting to offer a safer mode of transportation that tens or hundreds of millions of Indians could actually afford, they made a huge mistake in billing it as “the world's cheapest car”.  The Nano didn't have the cache of being someone's first new car, but rather it became the thing they bought because they couldn't afford anything fancier.  It quickly had the stigma of poverty attached to it, and as said before, in an upwardly-mobile society no one wants it to seem like they're not keeping up with the Joneses, or in this case, perhaps the Singhs.

According to Foreign Policy, Tata is trying to salvage the Nano project by marketing it more aggressively in rural areas where people are less likely to be status-conscious, as well as planning to export it to Nepal and Sri Lanka.  But that still leaves us with the problem, as illustrated by the Nano, of the ongoing power of the American Dream.  India certainly is not the only country making the transition from what, in a less PC-age, we called the Third World.  China, large swaths of the Middle East and Africa are also moving on a similar trajectory as India.  And as people in these countries move up from poverty, they too want their slice of the “American Dream” and all the material goods that come with it.  But resource depletion, increases in atmospheric greenhouse gases (GHGs) and climate change have all shown us recently that the Earth can't handle those already living the Dream, let alone a billion (or more) people joining the “middle class”, with all the material trappings that come along with it.  The skies over many Chinese cities are gray with smoke from coal-fired power plants, while oil exports from Saudi Arabia have been dropping as the Saudis burn more oil at home to generate electricity to meet the demands of their citizens; these are just two small examples.  The Developed World cautions the Developing to curb their energy use and GHG output; the Developing World views this as the Developed trying to keep them out of the party, trying to deny them the lifestyle that the Developed have been living for decades.  It doesn't help to sway the Developing World to a more aesthetic path that the world's largest polluter (at least until recently), the United States, has consistently worked to undermine efforts at global GHG reductions.

And that is unfortunate, since we have seen how well the United States can spread a message about a lifestyle to the world when it so chooses.

 

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Tata Nano has all the prerequisites to be the game-changing cars. In fact, it already has since we now have a lot of cars in the sub $4000 range in India than we ever had before. But why did it fail? The simple reason is that Tata can only control the capital cost, it has no control over the running cost that has been the reason why car sales, as a whole, have been coming down in India. Cost of petrol in the country from the time Nano launched to today has risen 50% ( http://www.mypetrolprice.com/2/Petrol-price-in-Delhi ). That's in less than 2 years. Consequently, in hindsight, the launch of Nano has been at the most inappropriate time. Give time for gas prices to stabilize or (hopefully) come down. Then you can see an increase in sales again.
 
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Tata Nano is surely cheapest car and it was expected to grab good market share in India. But there are some safety issues and quality maintenance issue due to which sales are not as expected. http://newbikes.indiandrives.com
 
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When not writing about international affairs, Ed Hancox works in nonprofit development. He holds a M.A. degree in International Affairs from The New School where he worked as a research associate on a project examining Russia's transition from Communism.