Tata Nano's launch could expand the Indian car market by 65%, according to rating agency CRISIL. The low price makes the car affordable for families with incomes of Rs 1 lakh per annum, the agency said.
The increase in the market is expected to push up car sales by 20% over the previous year. "The unveiling of Tata Nano, the cheapest car in the world, triggers an important event in the car market. Based on the statement by company officials, CRISIL Research estimates the consumer price of the car at around Rs 1.3 lakh. This brings down the cost of ownership of an entry level car in India by 30%," the company said in a report.
CRISIL said the launch will prompt other players to enter the mini car category over the next few years. These launches will entice a section of two-wheeler owners (currently nearly 50 million) to upgrade to cars.
CRISIL has prepared these estimates by projecting the income demographic transition pattern in India and the cost of ownership of existing and new entry-level cars. Given the shape of the income distribution pyramid in India, the new price point translates into a 65% increase in the number of families that can afford a car.
At the significantly redefined threshold for car ownership in India, annual car sales have the potential to increase by 20% over the sales expected in 2007-08.
