Tata Nano vs motorcycles

Here's another piece from Mail Today...

The potential customers for the Tata Nano are tipped to be the 5 lakh something Indians who put down their money on low priced (relatively of course) and fuel efficient motorcycles, and scooters each month. The general perception is - thanks to the lack of an affordable car on the market, two wheeler buyers chose the unsafe option of riding two wheels. But now that the Nano is here, things are set to change.
That, however, might not be the case. You see, it’s not as if the Indian bike buyer never had affordable options – after all, there have always been sub Rs 1 lakh cars available on the used car market. Sure, financing was an issue, as was the higher interest rates attracted by used cars, but options existed.
To understand why the two wheeler makers can continue to rest easy let’s first look at how the two wheeler circus works.
The two-wheeler arena is broadly segmented into motorcycles and scooters, with the former having the lion’s share (almost 70 %). Motorcycles are further classified depending on their price and power output into entry-level, executive, premium (or performance) and super premium segments. Majority of buyers purchasing premium and super premium bikes (read 150cc and above) do so for two main reasons – for the sheer pleasure of riding and second, they see their bikes as a social extension of themselves. Needless to say, the buyers here, mostly in the 18-30 year age bracket, aren’t looking at trading their rides for a cheap, sensible city car. They’d rather put their money down on a more upmarket used car to keep their standing intact.
As for the entry-level and executive bike (100cc offerings) buyer, price is the overriding decisive factor; then be it the purchase price or running costs or even EMI outgo. The dip in bike sales in the past year thanks to rising interest rates among other reasons stands testimony to the same.
The Nano meanwhile with its Rs 1,00,000 ex factory price is still 60 per cent more expensive to buy than an entry level two wheeler. Add to it higher recurring costs like fuel and maintenance bills, in addition to higher yearly insurance outgo, and over three to five years, the bike buyer is looking at a comparatively bigger dent in his bank balance.
But, I am in no way saying that Tata’s wonder car won’t sell; it will, but would probably be bought as the family’s second or third car; bought above all for the wives and mothers of city dwellers. The Nano would also make sense to buyers who have always wanted a car, but have found the monthly EMIs for even a M800 a tad high, and two-wheels, a dangerous proposition.A few bike buyers will buy the Nano too, but not as their daily commute vehicle (which will continue on our phenomenally fuel efficient and easy-to-ride motorcycles), but as the weekend dinner and movie car to safely haul the wife and kids in.