Nano-nomics and the death of the autorickshaw

I spend Rs. 100/- for 4 kms. and around 25 minutes of travel time every day to work on an autorickshaw

Now lets assume I am a lower-middle-class guy who has a new Tata Nano. I have part-financed it – Rs. 40,000/- from my pocket, and Rs. 90,000/- in auto-finance. Let’s say I use this crank-box for just 3 years. The resale value should be say something like Rs.30,000/- Lets just safely assume I drive 5000 km per year (I dont think I can take this car anywhere outside the city). So the useful output of this car is 15,000 km – the cost/km is something like Rs.6.60/- per km. The financing will cost me something close to Rs. 12,000 totally – that adds up to a total fixed cost of Rs. 7.40 per km. Assuming it is a petrol car, at current rates, the fuel cost shoud work out to something like Rs.2.50 per km.

So – the net cost (TCO – Total cost of ownership!!!) should be close to Rs.10/- per km. Of course, add a bit of maintenance and stuff to it (It will be defeating to do any kind of big time maintenance with it, so you wont do anything unless it means survival of the car) and your cost should be Rs. 11/- per km. Mind you – thats really conservative. With more kilometres in its life, or a diesel version, the car will work out to be much cheaper to use. (I know 15,000 km over three years is real low for a car – but I kept it that way to track my own travel habits and to keep the calcuations insulated from “induced usage“. Of course, I will drive much more, if I have my own steering wheel and 4 wheels to control). I would safely around Rs. 8-9 per km for its TCO. Now thats 40% of my autorickshaw expenses. Is it Nano only – or is it true with any owned car against an autorickshaw?

Lets take the next car in the chain which has a reasonable chance of surviving the Nano-slaught – A Maruti Swift. That costs like Rs. 500,000/-. Assuming a resale value of Rs. 200,000 in 3 years, and assuming the same debt-equity ratio, I get loan financing for Rs. 350,000/-. Let me assume the same useful output of 15,000 km over 3 years. The cost per km is a whopping Rs. 20/-. Add your financing cost of something like Rs 40,000/- and that it goes up by Rs. 22.50/- per km. Assuming a mileage of 14 kmpl in Indian road conditions, you get the net cost per km to be something lik Rs. 26/-. Over 4 kms, thats almost exactly my autorickshaw bill.

The more alert of you would have realised that the basic assumption of 15,000 kms over the three years makes all the difference. Change that to something like 75,000 kms and the whole equation changes. Then – it happens that the fixed and financing cost total upto  Rs. 4.50 per km. With a fuel cost of around Rs. 3.50 per km, and a maintenance cost of Rs.2-3 per km, it begins to be a bit of an answer to Nano.

But, thats precisely the point I am trying to make. Besides being under the affordability line of many who have never dreamt of owning a car, the clinching factor for Nano is you break-even very easily with it. You can buy a Nano, use it really sparingly and it is still heavily justified against an autorickshaw.

Of course, the cost argument for a car – any car – can be extended to two-wheelers. But, when it comes to two-wheelers we need to factor in that second variable called consumer behaviour. (Pardon the extreme stereotyping - firstly, bikes in India is for whatever reason a male bastion and secondly, thats what marketing is all about anyway). We can divide the two-wheeler space into three segments possibly. At one end, Nano is no substitute for a Pulsar 180/200/220 cc.They are two different animals, talking of TCO or otherwise. At the other extreme are the owners of mopeds and mini-scooters (in the 50-90 cc segments). These are bicycle alternatives – a different species again. The ones in the middle segment – Rs. 30,000-50,000 (100-150 cc) seem the most vulnerable to “Nanobalization”. Here again, one needs to look at the profile of the customer – is the customer a single male or the head of a family (may the womenfolk pardon me again). More likely, the bachelor owns the bike because he has a need for nothing better. The latter on the other hand, will like something better, if it is within his range of affordability – not necessarily as an alternative but probably as a complement. Is Nano a threat big enough for two wheelers to be worried about? I am not so sure.

On the other hand, I believe a Nano is a real tough thing to happen to autorickshaw drivers. Squeezed as they are between two big segments, they shall soon lose relevance and space as “family carriers”, and also on cost and comfort (littler and littler to speak about these days). As long as you know to drive, and can get decent parking spaces (admittedly, this is not a given), there is no reason to continue travelling in an autorickshaw anymore. Oh, yes – of course, a Nano will become the next Indica for taxi drivers, who will stuff their fleet with this. Where does that leave our not-so-friendly auto driver? Can he do well for himself – on a stand alone basis driving a Nano? I dont see a Nano – black and yellow – hail taxis becoming a reality very soon – and even when that happens, it will be an organized business.

Nano is probably going to sound death knell for the infamous unorganized (except as a union of rogues) Chennai Autoickshaw wallahs. And oh yes, there are others who think the same.

A light resurrection

It’s been a long winter! A Woodworm’s hibernation is much too insignificant to deserve an explanation. Nor do I expect that its return should be alacritously celebrated. Let me just get back to gnawing wood…

I decided to shift to WordPress. There are many good features, RSS feed included and I got a more pertinent blog name. Helping it was the mood of pulling off a Lazarus act and sinking in the fact that a lot of things have indeed changed. No more puerile declarations of my gauche,liberal credentials. Less than a handful of blog-mates post regularly – you know the usual routine – fatigue, writer’s block, lack of time, work, personal life yada yada. The personal bloggers have probably realised that life is a bit too serious to be trivialised and compressed in few disconnected lines. The political ones have probably become a bit more pragmatic – having learnt of compromises that wait behind each hardly opened gate.

Why did I return to blogging? Only 4 years ago, almost to the date I asked myself the same question and gave myself a fancifully political answer .  I then had things that I was passionate about – I now know it was passion I was clinging to, and not the things. I thought every stinging episode in life is a lesson for tomorrow. Today, I strike solidarity with Milan Kundera when he says that Einmal ist keinmal. You never can learn from anything. You only can witness, experience and move on.

In these tumultous four years, I traced the standard normal curve called life – with all its elements – people, situations, feelings and experiences. Oscillated, acted and reacted, spoke and spoke a little more, tested a few limits, traced a few horizons, burnt a few fingers. At the first sign of reprieve, I rushed back to the mid-point at zero. Action, I concluded was useless and troublesome. Inaction, I thought was blissful… and healing.

It may be so, but inaction is also simply boring. I am back to blogging not because of profound truths waiting to emerge from my gut. It is because inaction breeds emptiness. Adamant refusal to express is no better than holding on to things way too long. Life need not be trivialized any more – but there still could be trivial things in life to write about. There could still be a poem or two, a news item here and there, something about the power sector, things about Kamba Ramayana, my impressions on a Vijay Tendulkar play, about Tata Nano and customer segmentation in passenger vehicles…

The fact that I thought about things in a certain way, or wrote or behaved in a certain way will not be make any difference to any soul in a hundred years. Being may be unbearably light. But that didnt stop Kundera from writing, did it?