Can RP carmakers go as low as the Nano?

By Tessa R. Salazar Philippine Daily Inquirer INDIAN carmaker Tata recently took the automotive world by storm when it launched its $2,500 Nano. The world's cheapest car, by far, costs only the equivalent of a high-end laptop in this part of the world, at around P100,000. To be sure, though, Tata threw out all the little extras to come up with only the barest essentials of a car. At 625-cc, it has one windscreen wiper, no power steering, no power windows, no air-conditioner, and will give about 20 km to a liter. And no one in India is complaining, yet, because the Nano has been marketed as a four-wheel vehicle alternative to the motorcycle. 4 times as much In comparison, a decent three-liter diesel-powered jeepney in the Philippines would cost four times as much. The cheapest car exported to the Philippines is an 800-cc ultra subcompact priced at P319,000. There have been earlier reports that Nissan in India would try to approximate the Nano with its own $3,000 car. Nissan and India's largest carmaker Maruti Suzuki (the maker of budget car Alto) had planned to come out with a 3000-lakta (dollar) in 2006, but now Tata beat them to it, according to an Inquirer Motoring source who refused to be named. Still, the development of the Suzuki car continues and a release is expected between 2009 and 2010. If it does materialize, it will be launched simultaneously in Asian markets, most likely "after the India and China launches," the source predicted. Ferdie Raquelsantos, spokesperson of Motor Vehicle Parts Manufacturers Association of the Philippines Inc., a proponent of the first Filipino utility vehicle (PhUV) that features 60 percent local content, said the small car in the Philippines would not be as marketable as in India due to the "big family size of Filipinos." "And we're still in the level of trying to afford an underbone motorcycle. We don't have engine builders. And the transmission builders we have are even limited only to their own in-house models," he said. Raquelsantos said this should explain why a "majority (of motorists) would either own a utility vehicle or ride a much affordable motorcycle for running around, especially for starting families." Market acceptance Nissan Motor Philippines' Raymond Tribdino describes why the Tata Nano would be a bestseller in India, but not necessarily so in the Philippines. "The total industry volume (in India) is almost eight times as much as the Philippines." He added that in the Philippines, "the total industry volume is expected to increase only at a rate of 5 percent per year starting from the 118,000 units reported at the close of 2008." "The real problem for a super cheap small car in the Philippines is market acceptance. Small displacement cars now are slowly getting attention for fuel economy, etc., but durability is an issue since our roads and traffic conditions are a huge stress on the engines and drivetrains of small displacement engines." Tribdino cited the China-made Chery QQ, which he said would be a "good benchmark on the small cheap car and that infrastructure (for a super cheap car) is one key point for its acceptance, aside from the necessary critical mass needed for such a small car to succeed." He added that government support and the development of "a truly cohesive small car development plan is necessary." Value, not price Tribdino said that even the current car development program is stunted because of government inaction on tariffs and imported vehicles. Finally, in most countries where small cars are successful, mainly in European countries like Spain and France, and in Japan (with its Kei-cars) the key has been value, not pricing. "What comes with the price is the most important point in pushing for a small cheap car, and not the price alone." And if, for example, the cheap Nano would be exported to the Philippines as a CBU (completely built up), this "cheap" car may no longer be as cheap when it arrives in the country and the existing tariffs are applied. Pepito Castro, auto sales and marketing manager of Suzuki Philippines, said "customs duties are at 30 percent compared to those imported from Asean member-countries which are zero rated or at minimal rates. Considering the distance, freight (charges) have something to do also (with adding to the final price)," he said. Additional government regulations, such as emission requirements, would also add cost. So, we shouldn't expect to see, much less ride in, a P100,000 car on Philippine soil in the very near future. Still, the local motoring industry has sprung surprises in the past. And one of these days we might awaken to a hundred-grand car assembled in your friendly neighborhood garage, complete with power amenities and an air-conditioning system as well as with two wipers.