From Rickshaws to Land Rovers

Jan. 10, 2008— -- Watch "World News with Charles Gibson" TONIGHT, 6:30 p.m. ET for a report on a $2,500 car to hit the India's car market.

Wednesday. Not Thursday, not Tuesday. It had to be Wednesday.

So said Satish Jain, 42, as he spent his fourth hour outside a New Delhi car showroom, long after the dealership had closed, waiting for the arrival of his very first car.

Why did he have to buy his brand new $9,000 Maruti Suzuki Wagon R Wednesday?

He smiled as he answered: "My priest told me I had to buy the car Wednesday. If any other day, maybe I have an accident, maybe it falls apart. Wednesday, I'll have no problems."

For a devout Hindu, asking for divine automotive guidance was completely natural. But as an Indian, Jain had to fight years of instinct to decide to buy a car.

"I am very happy," he said as he handed over five $300 checks as a down payment. "We have always used rickshaws to get around. Now we can go shopping as a family."

Indians are shopping more than at any time in their country's history because they have never been richer. The middle class here is now as large or larger than the entire population of the United States.

As those 300 million-plus Indians increase their income, the automobile has become the symbol of prosperity and evolution in a country where many urban families still commute on motorcycles, the father driving, the mother sidesaddle in the back, and a child or two wedged in between. Analysts predict that car sales in India will double in the next five years, making India among the fastest-growing car markets in the world.

And as that market grows, it has, for the first time, entered the global arena. The struggling Ford Motor Co. announced Thursday that it was in the final stages of negotiations to sell its Jaguar and Land Rover brands to Tata Motors, the second most-popular carmaker in the country.

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"For a long time, we suffered from a psychosis of Gandhian simplicity," said Murad Ali Baig, an auto columnist who's been writing about cars in India for decades. "It was vulgar to have a prestige symbol like a car. But this is no longer happening. People now feel it's no big deal to have a car and flaunt it. If you've got the money, show it."

The majority of this country lives in villages and earn less than $2 a day. For car companies, that means the market is potentially huge. Right now, only seven out of 1,000 people own a car. Some estimates predict that the number could be closer to one out of three in the next 15 years.

In the mid '90s, Baig said, Indians had three cars to choose from. "Now, you've got 60 odd models of cars and SUVs, apart from maybe 200 engines and trims and all the rest of it. Now people are getting confused about what they should buy."

There are so many people driving cars, Baig said, "you don't have places to park. We have traffic choking up all over the place. And it will get worse before it gets better."

But outside those cities, the Indian countryside is suddenly opening up. Last month, for the first time in almost 20 years, the Indian government raised the national speed limit — from about 50 miles per hour to about 60 miles per hour.

The speed increase is due largely to a revolutionary reconstruction of the nation's roads. The centerpiece of that reconstruction is a brand-new highway system called the Golden Quadrilateral highway that links cities once connected only by dirt roads: Delhi in the north, Mumbai in the west, Chennai in the south and Calcutta in the east. It is the largest infrastructure project in modern Indian history.

Cheap Labor

As cars have changed India, so India is changing cars.

Next week Tata Motors unveils its long-awaited People's Car, expected to be the cheapest in the world — $2,500 brand new, which in Indian rupees rounds out to an even 100,000.

It will be followed by ultra-low-cost cars from Japanese automaker Suzuki, whose biggest market is India, as well as Toyota and Nissan.

And luxury cars have begun to invade. Mercedes and BMWs drive alongside horse-driven rickshaws, something unheard of just a few years ago. All told, carmakers are investing $6 billion in India every year.

Inside the Maruti Suzuki plant in Gurgaon, just outside New Delhi, a car is produced every 12 seconds. Although it is not as mechanized as its Western counterparts, most of the workers here simply check for errors. Those who do construct cars make around a fifth of what American auto workers make.

"India is now beginning to come up significantly on the automotive radar of the world as a source for high-quality, low cost production," Baig said. "Five, 10 years ago foreign brands wouldn't even look at an Indian component company. Today, they are lining up — if they can save a penny here, a penny there, it makes a huge difference."

The cars are not entirely up to Western safety standards. Most do not offer anti-lock brakes or airbags — those safety features are generally only available on the highest-end models.

Not that that matters to families like Jain's. He and his wife couldn't drive themselves home from the dealership — neither one has ever learned to drive. Jain says he will go to a driving school, are driving schools are booming in New Delhi because of all the first-time car buyers.

But when Jain and his wife get dropped off at his house, his family is there waiting. He feeds them sweets, and his daughter walks over to bless the car. She draws a Hindu symbol on the hood. It stands for good fortune — and wealth.