Posted by: John Elliott | January 10, 2008

‘Nano’ achieves Ratan Tata’s dream

Ratan Tata has achieved his dream. This morning the chairman of Tata Sons, one of India’s two largest companies, unveiled his “Peoples’ Car” at a pop star-style media circus staged at the Delhi auto show. He fixed the price of a basic 623cc model at the much vaunted level of one lakh (a hundred thousand) rupees or about $2,500.

That makes it the world’s cheapest car, though it may not be very profitable.

And he named it Nano – to conjure up high tech and small size images.

“A promise is a promise” he said, announcing the price. When I asked him whether the figure would otherwise have been higher, he said the promise had been a response to what had appeared in the media.

This had become “a challenge” that he felt he had to meet. He’s proud that he has launched “a means of transport that does not exist”, enabling families to move up-market faster from motor cycles that frequently carry three young children as well as parents.

Ratan Tata in the Nano

Ratan Tata in the Nano

The basic model of this handsome elongated bubble of a car will have the dealer price of $2,500 but will cost the consumer about $3,000 with tax and delivery costs when it is launched toward the end of this year.

That is about three times the price of an average motorcycle and half that of the Maruti Suzuki 800cc saloon, currently India’s lowest priced car. More luxurious versions, with air conditioning and other features, will be priced higher.   

The car is unlikely to be exported for three years or more but, when it is, extras such as air conditioning and power brakes and steering would be added.

Rajiv Bajaj, managing director of Bajaj Auto, claimed this week when he launched a concept $3,000-plus car to be developed with Renault and Nissan (NSANY), that Tata (TTM) had never said his one-lakh car would be profitable. Today Tata dodged the question, saying the auto show was “not the platform to talk about breaking even.” Margins would be “spread over several models” and, with variants, the car would be “a profitable proposition for the company.”

Contrary to recent mocking jibes, Nano would meet all emission, pollution and safety norms, though its basic India version would not be sufficient for full European emission and side-crash requirements, nor have an air bag. Its maximum speed will be about 65 miles an hour with regular gas (diesel will follow later) consumption of 50 miles to the gallon.

Tata would not say much about how the low price has been achieved beyond that his Indian designers had “shrunk the package of the car” so that less steel and other materials are used, along with a smaller engine. But it is only 8% smaller than the Maruti 800, though it has, Tata claimed, 21% more inside space.

Some savings will come from locating suppliers on the same site as the main Tata Motors factory in West Bengal (which has been hit by rows over use of land). Further savings might be made later by using subcontractors to assemble cars nearer the point of sale.

Overall, Nano is undoubtedly a major achievement for Indian design and manufacturing. It is also a huge personal success for Tata, whose ideas have been met with widespread incredulity since he first broached the idea nearly ten years ago of moving families off dangerously overloaded motor bikes and into the relatively greater safety of a low cost car.

He has said recently that he would like to retire before too long and that it would be a good time to do so when the Nano is fully launched. He is now 70 and is due to go by the time he is 75. “I do not want to go out in a wheelchair,” he recently told Business World, an Indian business weekly.

But first he has to find a successor who can provide the widely diversified and growing Tata group (currently bidding for the Jaguar and Land-Rover car businesses) with the type of strong leadership that he has achieved – and that seems to be posing him with a more difficult challenge than designing and unveiling the Nano.


Responses

  1. On face value, this is a continuance of an illustrious pioneering tradition by the Tata family – Jamshedji introduced steel and heavy industry, JRD Tata pioneered Airlines, and now Ratan has introduced the promise of a small car. The one question that no one seems to be addressing is – DOES INDIA NEED (YET) ANOTHER CAR?? At 637cc, this is a cleaner version of a 4-stroke auto-rickshaw or phat phat’s that we see on Indian roads. All this helps to do is to fuel the small car arms race even more (from Suzuki, Hyundai, Fiat, others) – all plying on the same clogged roads and poor infrastructure. Ratan Tata could have been the visionary who introduced privatized mass transit systems (which every environmentalist agrees is the solution for highly populated countries like India) – he chose the safe route and chose the small car – which may be but an insignificant blimp in his legacy.

  2. Dan:
    It cannot be considered “dumping” if the car is sold for $2500 in it’s home country.

  3. Congratulations, Mr. Tata! You are the man, keep up the good work.

  4. Dennis,
    This car is not meant for your boat. The purpose is higher than your boat….

  5. It sounds like a great idea, the only problem is safety. I doubt a car this cheap would ever be made safe enough to be sold in the US. Especially when you live in a country where everyone drives an SUV or pickup. This thing looks just like the “smart car” from Europe but is about $10,000 less, and for obvious reasons. It’s exactly what India needs, but not the US (remember the yugo?)

  6. This car is not all that bad.

    I would consider buying one of these cars every two years. I know that they probably are not that big in long-term reliability, but if I am only paying $2,500 for a car every two years it is not a big deal. My car note now is $300 a month for a Toyota Camry. By financing this car for two years, I could possibly save over $125 a month. That sounds good to me.

  7. Kudos to Mr. Tata for coming up with a people’s car. But with a MSRP of $2500.00 in USA and Canada… hmmmm can you smell/spell dumping?
    Hope CBP and CBSA are listening.

  8. Great idea, but; the car needs to be a little bigger to be sold in the USA, yes..we need a car to cut on the gas..but at the same time to be a safe vehicle and price. Remember the Volkswagen Beetle ! that was the best idea from Germany..but too bad it’s price is a little high..if the price was or around 5 to 8 g’s dollars will be a good thing for everyone and even better if it was electric..so..India keep on you are in the right track..

  9. Tata has done all Indians proud. He is a real ‘Bharat Ratan’, but no Indian politician has spoken for him as one deserving India’s highest civilian award on Republic Day. On the contrary, the usual petty bickering has started for giving the award to various politicians.

    This is the paradox that India is!
    http://www.vinodksharma.blogspot.com

  10. The environmentalists should work to get the gas guzzlers off the road, start with the SUV’s. People should be moved to non polluting cars like the Nano.

  11. my 2007 toyota rav4 suv can probably tow a boat but i have no need for that feature,or the moon roof.but toyota would not offer me a basic vehicle without the package.

    india’s city traffic speeds are at about 5 miles per hour. this car sounds safer for a family of four than a scooter or motorbike.

    now we’ll watch the gas prices in ca shoot up to $6 or $8 a gallon.

  12. This is a great accomplishment, and I’m hoping this is a reliable, durable vehicle, and not like the Yugo. I’m looking forward to someone making a good, fuel efficient $5000 car for the U.S. market, because my 1990 Subaru (42mpg)is showing some strain.

  13. Good job by Tatas. For this car to really translate into a success in India, I think two things need to happen:
    1) Infrastructure needs to be developed at a very rapid pace.
    2) Tatas should consider quickly coming out with an electric version of the car that would lend itself to being charged from a variety of eco-friendly green technologies.
    Right now as things stand, this car has more potential for success in China, Latin American and European countries than in India itself.

  14. Tatas have fired the first wake up shot – an emerging market company has actually designed a small fuel efficient car – not for the world but meant for the Tier 2-3 cities in India – the working class urban massess & possibly the upper urban middle class looking to own a second car – they would struggle to keep pace with the Indian demand.
    This launch will spur a host of auto MNC’s to look at producing small cars in India – with a local, economic auto ancillaiary industry & model upgradations – in 3-5 years India should be a global design point & regional hub for production of small fuel efficient cars.
    Thanks

  15. One small car for India’s common people, one giant leap for global carkind.

    As for Dennis’s comment, one can only shrug and pray for America’s future. This hubris won’t take you far.

  16. Dennis,

    I hope your tongue-in-cheek comment was in good humor.

    Having traveled around the world, I can only say that your comment appears rather ignorant (arrogant for those outside the US).

  17. Thanks Mr Tata!! I hope we had more politicians like you in India who can for a change keep their Promise. I hope the influx of these cars will atleast instigate the Indian adminstration to improve the dreadful road infrastructure in India.

  18. Mr. Tata,
    Accept my heartiest congratulations. I promise you to buy ‘Nano’ as soon as it would be available. I sincerely hope that Tata Motors would become India’s answer to Toyota by presenting many more innovative cars.

  19. Well done Ratan Tata..yiu have done INDIA proud.. and also tapped into the aspirations of millions of non car owners.. that dream of owning a car of one’s own

    Paramvir Thakur
    Delhi

  20. I have a lump in throat, when I heard ‘a promise is a promise’.. What an honest business man, who truly cared and had the common man in mind.
    Off course this may not have all the bells and whistles, but surely a leap ahead technically and at a price of the Radio/DVD player in a lexus !!
    Hats off Mr. Tata.. Wish you the very best !!

  21. Sounds like the perfect company to buy Jaguar from Ford. Just think, a new Jag for only 15K or less

  22. Dennis, The car was never meant to tow a boat. It was meant to carry a family of four safely around the chaotic road of India. And that, it will. For towing your boat you can buy one of those 10miles/gallon beasts and contribute your share to the global warming. It would be a good ‘drop the kids at school’, Do the grocery shopping kind of a car. It is definitely not meant to be driven on the Interstates. Please do give credit where it is due, even if it is from India

  23. Kudos on being able to produce an affordable car. It is easy to pick on the Big 3 and their lack of innovation – some of which is justified. The problem in the US is a bit more complicated: automakers must meet the demands or strict governmental regulations for both safety and emissions, not to mention that the infrastructure in the US is designed to allow travelers quick, convenient access to services that may be quite a distance from their homes. It is true, however that the future of the automobile is a more affordable, fuel-efficient vehicle.

  24. Dear Mr. Tata,
    Hats off to you and your team’s effort in making a car within 1 Lakh price tag and sucessfully lauching on road.You are the best man Indian business ever saw.

  25. Congratulations for this cost saving innovation!!
    However I am always move lot faster in big cities in India if I walk/jog instead of traveling by a car. India will be better off if cars are banned within city limits except for elderly/sick citizens. The status game of having two cars per family is bad for the environments, and does not help much with mobility. A few bi-cycles per family can do the magic of better mobility, less pollution, better health.

    Out side the city limits, we need robust car to survive an accident at a high speed with the fast moving over-loaded trucks.

  26. Dennis, it will tow your boat and your family and you…….try it or you can wait for the cheaper Chinese copy.

  27. Unbelieveable. He’s done it!

  28. Mr. Tata, we need a president like you who can keep his promise. Please lead this World…

  29. You are the BEST!! Mr. Tata

  30. Great job and thanks for keeping your promise. Can you run for President?

  31. Mr. Tata, You did it!!! I wish you all the very best. You are one man who really cares for the common man/woman in this World. Kudos to you and I truly believe that you deserve the highest automotive praise in this World. Thanks for Caring Sir!

  32. Certainely, you kept the promise…
    You are the Pride of INDIA…!!!

  33. It’s commendable that he’s acheived his dream of making the “car” affordable for the aspiring lower middle class of India and maybe it’s even a precursor to fulfil the dream of a personal vehicle for people in developing economies the world over. However, a company of the stature of Tata – it’s a giant in India and commands a near unending supply of skilled personnel, raw material and govt. help – would have done the world a lot of good if they had brought this machine to the world as an electric/hydrogen powered vehicle. Maybe the fact that Ratan is an aging industrialist and wanted his dream accomplished quickly or beginner misgivings (Tata is relative new in the passenger car market) came in the way of the other more important dream but cheers to the man – this could be an imporant moment in the world.

  34. I find the key point

    “Its maximum speed will be about 65 miles an hour with regular gas (diesel will follow later) consumption of 50 miles to the gallon”

    as the most appealing, to me seems to be an ideal city car, though i would never think about taking it for long drives.

  35. Mr. Tata- you did it! Congratulations!

    May this harbinger the start of a new era- an era of manufacturing superiority from India(just as Mr Firodia of Kinteic put it aptly)

    Things happen- people talk- mis-steps come, but a true leader goes on! All kudos to you!

    p.s. I am the same person who wrote about service at India Hotel(Taj Group) And I am glad of this ground breaking step from your stable.

  36. Will it tow my boat?

  37. the future is for cheap affordable and fuel efficient cars – this is where the big 3 and european manufacturers miss out – and this is where companies from india and korea will prevail. as gas gets more expensive – as well as economies change, smaller, cheaper and fuel efficient cars will be the norm. more and more small cars are now being sold in canada too. lets not forget the biggest market still lies in india, china,latin america and africa – and this is where the future growth is. its time manufacturers in US look towards the world for growth – and work on making small fuel efficient cars,


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