There have been studies galore regarding what the Tatas’ small car will do to the passenger car market. While views vary, everyone agrees that both in success and in failure, the Rs 1 lakh car will have a dramatic impact.

International automobile consultancy J D Power believes that provided the Tatas get the product right, the car with its attractive price tag will make a major dent in the top-end motorcycle segment. In other words, it will lure customers away from bikes like Karizma, Pulsar 200-220cc, and the Avenger.

A study by the Associated Chambers of Commerce (Assocham) on two wheelers versus small cars arrived at more or less the same conclusion. Covering about 3,000 potential customers in metros and semi-urban areas, the study revealed that the Tatas’ car could capture as much as 25 per cent of the two-wheeler market. This translates into a market size of over 19 lakh at the very outset, making it not only the largest-selling car in India but globally as well from its very first year.

To quote from the Assocham study: “Consumers are more inclined to buy budget cars to satisfy their quest for prestige. Metro consumers feel that these cars would not only serve their needs better and tend to their requirements efficiently, but also provide safety compared to two-wheelers.” Prospective two-wheeler buyers are even postponing their purchases in anticipation of the small car. “Ninety per cent of respondents in the semi-urban segment categorically stated that they would rather manage their movements with their existing possessions than invest in a two-wheeler as the ‘small car’ is likely to hit the market in a year.”

To the uninitiated, the 19 lakh sales figure might appear huge. After all, the entire passenger vehicle segment amounted to 13.8 lakh in 2006-07. But what is certain is that this car will, for the first time, pose direct competition to two-wheeler manufacturers. Two-wheeler industry heavyweights like Hero Honda and Bajaj Auto, too, have awoken to the challenge and are preparing to protect their turf. While Bajaj is in talks with French automaker Renault to manufacture its own low-cost car, Hero Honda remains unperturbed.

“A small car can never match up to the benefits of a two wheeler, such as low cost of running and fuel efficiency. No car can give a mileage of 80 kilometers a litre, and that will continue to remain our USP,” said the grand daddy of two-wheeler manufacturing in the country, Hero Honda chairman Brij Mohan Lal Munjal.

The threat to carmakers like Maruti and Hyundai is a lot more serious. With the car expected to expand the market, both the companies, which do not have any product to rival the Tata car, could lose market share. But as was evident at Maruti Udyog’s recent annual general meeting, the company remains unfazed, though there are rumours that prices of its flagship Maruti 800 may be cut in case the Tatas get their act together.

“We believe that the car would pose serious questions to two-wheeler manufacturers. Those who cannot afford a Maruti today will go for it, and not vice versa,” said Maruti Suzuki MD Jagdish Khattar. “We have a strategy of our own and it does not depend on what others are planning.”

For the car to match up to expectations, Tata Motors will have to find answers to a lot of tricky questions. The company has itself admitted that adhering to the targeted price tag of Rs 1 lakh ($ 2400) will be tough. A look at the cheapest cars available worldwide today indicates why. The cheapest car at $ 3900 is manufactured by Chinese carmaker Chery (Maruti 800 and Hyundai Santro also figure in the list of the cheapest ten), and the price of Tata’s car is significantly lower at $2,400. In addition to sticking to the target price, the product must also satisfy all. And unlike in the case of the Indica, the Tatas may not get a second chance.

“Unlike the Indica, where Tata Motors got a second chance, it is doubtful if it will get a second chance with the Rs 1 lakh car as consumers have become more discerning and demanding,” said JD Power director India Mohit Arora. “How far-reaching will the impact on the two-wheeler industry be will depend on the product’s performance, after-sales service, and overall customer satisfaction. Even rural customers are becoming more demanding and less forgiving.”

The battle lines are drawn. In one stroke, Tata may emerge as the country’s largest car maker, leaving Maruti and the rest as mere specks in its rear view mirror. Or, the company, which is still known predominantly as a truck manufacturer, may produce a car that flatters to deceive, and may end up as just another ambitious project that merits only a footnote in global automobile history. Either way we will have an inkling of what will be on January 10, when the car debuts.