JEREMY CATO
GENEVA — From Thursday's Globe and Mail Last updated on Monday, Mar. 30, 2009 03:14PM EDT
I couldn't make the trip to New Delhi in January, so I settle on a March trip to the 2008 Geneva auto show, the 78th edition, to search for a Nano.
The Tata Nano, to be precise.
In rich, overpriced, snooty Switzerland, the Nano was the oddity in a car show filled with glitzy, sexy cars and worried auto executives. The latter spent their time talking about recession in the United States, oil prices topping $100 (U.S.) a barrel and looming regulations that call for dramatic carbon dioxide reductions in Europe just as regulators in Canada and the United States are putting in place demanding fleet-wide fuel economy rules.
Fun and games? Not really. This year, Geneva was as serious as it has ever been. There even seemed to be a distinct shortage of cheesecake — leggy runway models — decorating the cars and concepts. This certain was not the Geneva we'd come to know and love.
The Nano, though, was something very special. In Geneva, it represented an affordable oddity in a sea of mostly dream cruisers and new model introductions.
At a price of about $2,500, this four-door city car from India costs about the same as a decent three-night stay at a modest Geneva hotel. On the floor of the Palexpo exhibition centre near the airport, a funny-looking, little, four-door, yellow Nano was within a stone's throw of a $2.4-million Bugatti Veyron special edition (made in co-operation with luxury good maker Hermès) and Alfa Romeo's $200,000 8C Competizione.
The ultracheap Nano promises to suddenly bring car ownership into the budgets of tens of millions of people across the world. But Tata's stand was a popular spot for another reason: This family-run Indian conglomerate just announced that it will respect the British heritage of the Jaguar and Land Rover brands when Tata Group chairman Ratan Tata seals the deal for buying both from Ford Motor Co.
"Our plan would be to retain the image, the touch and the feel of Jaguar and Land Rover. We will not tinker with the brands in any way. They are special global brands and whoever acquires them has a responsibility to nurture them and enable them to prosper," Tata said at the auto show.
Of all the many car companies emerging from developing countries, Tata is now getting the most press by far. Between the Nano and the purchase of Jaguar and Land Rover, Tata has managed to grab the attention of the world's automotive press — not to mention the hopes and aspirations of potential car buyers from Delhi to Mumbai.
The folks back in Britain, though, appear somewhat ambivalent. An upstart conglomerate from a former colony buying two storied British car brands? Shocking. More practically, there are fears in Britain of production and component manufacturing leaving for low-cost countries.
Ratan Tata was in Geneva at least in part to quell such fears.
"We are conscious that the brands belong to Britain," he said.
"These brands will continue to belong to Britain," he continued.
He added that Tata Motors Ltd.'s top executives have invested time talking to British labour leaders in an effort to convince them that the Indian company has no plans to drastically change the business structure of the luxury brands. Some 16,000 Jaguar and Land Rover jobs are at stake in Britain.
So it looks as though, at least in part, the $67-billion conglomerate responsible for the $2,500 Nano plans to spend somewhere in the neighbourhood of $2-billion to own the blue-blooded British brands. Now that's a lot of Nanos. Tata also owns Britain's Tetley Tea Group, so it is possible to look at it another way: The purchase of Jag and Land Rover is at least in part being funded by the sale of tea bags.
There may be lessons here for Ford. The Dearborn, Mich.-based car company needs Tata's money to fund a turnaround after posting losses of more than $15-billion in the past two years.
Perhaps Ford should consider a more comprehensive cheap-car strategy.
Certainly the luxury car game has been a bust. Ford doesn't break out financial performances for its various luxury brands, but has acknowledged that Jaguar has been unprofitable for years. It has been estimated that Ford has spent $10-billion or more on the purchase and continuing support of Jag and Land Rover — with no net return on that investment at all. Not a penny.
Personally, I like Tata's chances with the British brands. If Tata can make money on a $2,500 car, surely it can find a way to squeeze out a profit on cars and SUVs selling for $50,000, $60,000, $70,000, $100,000 and more. Surely.
Thanks to Tata's Debasis Ray, I was thrilled to get a hands-on experience with the Nano. It is a tiny, four-door subcompact with roller-skate wheels and a cabin so low my head nearly touches the roof. The snub nose and sloping roof, the unadorned body, the lack of a radio or a passenger-side mirror and the lone windshield wiper all add up to a car that is stylish in a counterculture kind of way.
Really, the Nano is the antithesis of Geneva, where a modest plate of pasta in a very plain restaurant can run to $18 or $20, tip always included, regardless of the quality of service. Yes, critics say, the Nano could lead to possibly millions more automobiles on the road — especially India's already clogged roads — but at least Tata officials insist they are not sacrificing quality and safety standards to meet a low price tag.
Tata, the chairman himself, says the car will meet safety standards and pollute even less than motorcycles.
It will pass domestic and European emission standards and average about 20 kilometres per litre or 50 miles per gallon. Tata says the Nano will revolutionize the auto industry. Analysts believe the Nano may force other manufacturers at least to lower their own pricing.
Indeed, here in Geneva, officials from French auto maker Renault and its Japanese partner, Nissan, say they are looking at how they can build and sell a small car for less than $3,000. The Nano, humble and homely, looked to be one of the most important cars on hand at this year's Geneva show. Other similarly super-cheap models surely will follow.
But not this year in Geneva '08. Instead, we had a flood of high-tech answers to questions about fuel economy and fears of global warming. BMW, for instance, showed a very interesting diesel-electric hybrid X5 SUV concept.
Officials said its "efficient dynamics" design and engineering will save huge amounts of fuel. The X5 concept car has a four-cylinder 2.0-litre, twin-turbo diesel engine that produces 204 horsepower, but still manages around 40 miles to the U.S. gallon.
It's symbolic of so many unveilings in Geneva.
But a rival executive at Mercedes-Benz said that while all the whiz-bang technology in the world might make vehicles more environmentally friendly, there is no sign that consumers are willing to pay more for green technology.
"The secret for marketing in the next two years will be to make green or blue as sexy and desirable as horsepower," said Klaus Maier, head of sales at Mercedes. Consumers have long been willing to pay for more torque, more power, more cylinders, but not for costly environmental technologies.
That brought me back to the Nano yet again. It is not burdened with either excessive power (just a two-cylinder, 600-cc engine) or costly "green" technologies.
The Nano is basic and cheap and as much the future of the car business as any of the fancier, more advanced vehicles on show in Geneva. Perhaps more so.
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