Make way for something small

E-Mail This Post/Page
July 12th, 2010 Rrishi Raote

In the lane behind the office is usually a long row of illegally parked cars. Most are drably coloured: grey, brown, white. Most days, however, the line is brought alive by a flash of mango — that is, a mango-shaped and mango-coloured Tata Nano. It’s a delight to see it there, seasonally correct on a sweltering day under a green tree.

The funny thing is: like some of the larger cars nearby, the Nano too comes equipped with a driver, who sits in the rear seat fanning himself with a newspaper.

Now, the car costs under Rs 2 lakh on the road; the driver probably costs Rs 60,000 a year, if not more. It’s amusing, don’t you think, that this car’s owner bought the cheapest car on the Indian road but also hired a chauffeur?

It’s like that in the world of the Indian small car. It has become intensely aspirational. Nissan’s new Micra was launched a few days ago, and there you had print, Internet and TV reviewers and commentators telling us about design, inside and out, the “eye-catchingness” of its roundish dashboard instrument panel, and either admiring or scoffing at the car’s peculiar little haunches. Things like seat height adjust and ergonomics and standard airbags were also mentioned, but almost as if such luxuries were only to be expected.

Before the Micra we had the VW Polo, and before that the Fiat Punto, the Maruti Ritz, Hyundai’s i10 and i20, the Honda Jazz, the Skoda Fabia… forgive me if I’ve missed a few. All of these new “small” cars, “affordable” hatchbacks, middle-class cars, come equipped with sundry luxuries that all boost the aspirational value of what was once the plain, frills-free 800-Alto-Zen cohort. They may have “climate control”, whatever that is, and extra speakers and split rear seats, and umpteen seat settings and adjustable steering and funny little lights and storage spaces and a rakish bonnet and “aggressive” headlights and a “stance” — whatever that is — yet they cater to something near the bottom of the automobile market. Thus mass-market becomes premium, small becomes big, affordable becomes aspirational.

Yes? Okay? Well, fine, if that is the case in the automobile market — and some of these new cars really are clever and desirable — can’t we take this interesting business lesson and apply it elsewhere?

For example, in real estate. Here in the metros as far as new residential building is concerned, we have highly expensive and enormous flats and “villas” (more accurately, row houses) in the nearer and more accessible suburbs; large, high-priced builder flats downtown; and, of course, handcrafted farmhouses. None will be available at a price under eight figures. These are the BMWs, Mercs and Bentleys.

At the lower end of the market we have medium-expensive and small flats in the further and less desirable suburbs, like Thane outside Mumbai or Ghaziabad outside Delhi. Some of them will have a decent level of finish, but most will not. All will be available at a price within seven figures. These are, with admittedly a few Ritzy exceptions, the 800s-Altos-Zens.

What’s in between, for the paying middle classes? Plenty, as far as cars are concerned; very little, as far as real estate goes. One can extrapolate from the shape of the car market that there is a huge, unserved market for mass-market yet premium, small yet big, affordable yet aspirational housing.

It’s just silly to say we don’t have space or can’t do it. Every city has underutilised space downtown. The central and state governments selfishly sit on tons of badly used Delhi land. And even a crowded city like Mumbai has hundreds of acres of mill land quickly being released to big builders. What do they build on it? Super-premium offices and eight-figure flats.

Silly. They should be building smaller homes to a higher specification for the middle classes. I may be imagining it, but it is the middle classes who spend more money within their own neighbourhood or locality, more than the very well-off. For the health of the local economy, for sufficient numbers and density, for a long-term residential ethos, go after the middle classes — the same notional demographic that happily buys premium small cars. The new, rather smaller, multiple-income Indian family. Try putting up hundreds of wisely designed studio and one- and two-bedroom flats downtown, and watch how much good that does the city.

Real estate still has not learnt to compete for the value-conscious Indian customer like the car industry has. In real estate, if you got the land you’ve got the customer by the nose. It’s not like that with cars. The current real estate paradigm of Nearby/Costly and Faraway/Cheap won’t last. A big reward almost certainly awaits the builder who can learn some auto lessons.

9 Votes | Average: 4.78 out of 59 Votes | Average: 4.78 out of 59 Votes | Average: 4.78 out of 59 Votes | Average: 4.78 out of 59 Votes | Average: 4.78 out of 5 (9 votes, average: 4.78 out of 5)
Loading ... Loading ...


All the content posted in the 'Business Standard Blogs' section, unless specified otherwise, are made by Business Standard employees. The content posted in 'Business Standard Blogs' does not follow routine internal Business Standard reviews and editorial processes and should be considered only as the views and opinions of the employees and not of Business Standard. way for something small digg:Make way for something small newsvine:Make way for something small reddit:Make way for something small Y!:Make way for something small

Leave a Reply