Is There a Third Way to Think About Low-Cost Cars?

Photo from

By Ethan Arpi and Rob Katz

While discussions of Ratan Tata’s 1 lakh car – and other entrants to the ultra-cheap car market – are nothing new to and many other blogs, the concept received another burst of publicity over the weekend when New York Times columnist Thomas Friedman featured it in a piece entitled No, No, No, Don’t Follow Us. Friedman – whose column is syndicated in newspapers throughout the world – argues that while Americans don’t occupy the moral high ground when it comes to driving, following the American model of motorization would be catastrophic for India’s economy and its environment.

Friedman’s point is well taken: if India doesn’t leapfrog the American model, it risks choking its economy on smog and traffic. (See China; Beijing for a sobering look at the potential future.) Not convinced? The statistics speak for themselves: There are 11 personal vehicles for every 1000 eligible drivers in India. China, another country inundated by the tide of urbanization, has nine personal vehicles per thousand eligible drivers. How many does the United States have? The answer is staggering: 1,148! Anyone who has sat in traffic in Mumbai knows this is no joke – at 11 cars per 1,000 eligible drivers, India is already maxing out its city’s streets.

One possible solution – the American model – is to simply build more roads to accommodate more cars. India’s already trying that – with little success. Friedman notes that a recently-opened highway in Hyderabad has already reached capacity, suffering from the very bottlenecks it was built to prevent. The perverse incentive of road construction is that it encourages private car ownership, which, in turn, encourages more road construction. It’s a vicious cycle that ends by destroying cities that were originally meant to be saved.

We argue that there is a third way for India: It should neither replicate America’s car-centric model, nor should it try to build its cities without sufficient mobility. Rather, based on smart planning and good policy, Indian cities can be shining examples for other cities around the world, accommodating unprecedented growth while improving the economic, environmental and day-to-day lives of their residents.

As Friedman suggests, clean mass mobility is the way to go. That’s not to say that cars should be excluded from the city, but they should be priced in a manner that accounts for the externalities, like traffic congestion and air pollution, that they create. Using tools like parking regulations, congestion pricing, and high emissions standards can improve public space while generating revenue for mass transit – which can meet the needs of all city dwellers. India’s streets are also very unique, crammed with rickshaws, two-wheelers, and bicycles, so any effort to improve mobility must also carve out a significant space for them.

Already, cities like Pune, Pimpri-Chinchwad, Indore, Bhopal, Vijaywada, Vishakhaatanam, Jaipur, Mysore, Ahmedabad, Surat, Rajkot, and Delhi are developing bus rapid transit systems and other well-planned public works to allow urban residents affordable, clean, and convenient transport options. In fact, India’s National Urban Transport Policy has made mass transit – like bus rapid transit systems – a priority.

But there are still serious obstacles. The personal automobile has already caught the public’s imagination in this country, whose burgeoning middle class is developing a voracious appetite for newly affordable goods. Among Bollywood elites, the latest trend is giving super-expensive cars as presents to friends and colleagues. It’s only a matter of time before these customs and habits trickle down to the masses, albeit in a cheaper form.

With the looming threat of global warming and energy insecurity, the stakes are high. According to Anumita Roychowdhury, Tata Motors has global ambitions, planning to build a retail network across Africa and Latin America. Other companies like Hyundai and Nissan are also promising to enter the market and scale their businesses to other continents. In this respect, India is a testing ground, a pilot project of sorts, for dealing with really cheap cars. If it can come up with a solution – a third way, like we suggested above – for dealing with rapid motorization, it will skillfully position itself as a model for other countries to emulate. But if it can’t, India will have doomed itself to a never-ending transportation nightmare, and other countries, soon to be flooded with cheap cars, will be left groping in the dark for a solution.

Right Menu Icon