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A Case Study on

TATA’s Big Idea of a Small car


nano – The People’s car of India
BY
Dr. Surabhi Goyal,
Associate Professor,
IILM Institue for Higher Education
3, Lodhi Road, New Delhi.
Email Id: surabhi.goyal@iilm.edu
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TATA’s Big Idea of small car
nano - The People’s car of India
With changing customer profile and high disposable income, India becomes a land
of
opportunity for all auto giants of the world and of India . Many auto players ar
e already
working on their strategy desks to lure the middle class buyer, with their best
business model
of small cars. Since the small car market is yet to unfold, it is difficult to s
ay whether there
would be something for everyone or only few will survive. However, the first mov
er is Ratan
Tata who conceived and promised a small cheap car to every Indian . The Case Stu
dy, brings
out the stages of development of the concept called “Tata’s Low Cost Car – NANO”
. It traces
its history from the announcement by Ratan Tata, about its plans to manufacture
a low cost
car at a price of $2500, on March 23, 2003 at Geneva Motor Show, its launch on 1
0th January
2008 at Delhi and various issues emerging from entry of a product like a low cos
t small car in
India. This study, based on extensive research of relevant records, highlights t
he indigenous
model of Innovative Designing and Frugal manufacturing on one hand and Value mar
keting
on the other. It attempts to bring out the features in the car that would attrac
t the bottom of
the pyramid. It also analyses the potential domestic and international clientele
for Nano and
Tata’s future concerns with respect to holding the price point, widespread after
sales service,
durability, low maintenance cost and environment and safety issues. The study is
aimed to
provide the students of management, a deep insight into the marketing and produc
tion
management related issues and sharpen their knowledge and skills.
Keywords : Nano, frugal manufacturing, value marketing, no frill, collaborative
engineering,
Nanolution, Nanomania
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The ‘ Car’ nival
Jan 10, 2008 11:30 am- New Delhi, Pragati maidan Hall No.11: There was a
nip in the air and the moment of reckoning came when a voice wished
gathering. It was like a suspense thriller and finally when curtains were out
we were left spell bound. He was none other than the man who was in the
news all these days. There was apt silence and then the dreamer nee achiever
spoke and the world listened. Every sentence, this man spoke was cheered by
one and all with occasional flashes from the photographers wanting to
capture every mood of the man because this man had made history of sorts.
This was an extract from a reporter’s diary that celebrated the advent of India’
s People’s car that left the
world spell bound and made every Indian proud. For Ratan tata it was the second
time. Way back in 1999,
he touched the hearts of millions of Indians with ‘Indica’-India’s first indigen
ous passenger car that became
a great success story. Once again he did it. This time he felt the pulse of an h
ungry audience waiting at the
bottom of the pyramid and brought out the world’s cheapest car – The Nano. Curio
usly enough this was
exactly after 100 years when world got its first affordable car- Tin Lizzie in 1
908.
1908 - Detroit, USA — Ford’s Tin Lizzie 2008 - Delhi, India —– Tata’s Nano
100 years on the other side of globe
The Great Revelation – History repeats itself
For any country with the increasing population on decreasing space, it made perf
ect sense to make a small
car but it wasn’t arithmetics alone that prompted Ratan Tata to get the big idea
of small car, it was typically
a social cause that moved him to make a people’s car. It was on an August night
in 2003, Ratan Tata was
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driving back home from his office. It was raining heavily in Mumbai, when he saw
a young couple riding
on a scooter with two children all drenched. He was moved by the risk this famil
y was taking on a wet
road. In his missionary zeal, absolutely unaware that he was operating from the
highest level of value
hierarchy, he thought of giving back to society by making a all weather four-whe
eler. Over the next few
days, he doodled with sketches of two wheelers having a bar around it and some w
eather proofing but all
ran in conflict with his promise. He then decided to change his track and called
upon his team to design a
four wheeler which can be called a complete car. This memorable moment has gone
down in the history of
Tata Motors and Indian automobile industry as the Great Revelation.
In fact, unfolding the history of world’s most popular cars, what’s common to al
l of them is that each of the
people’s cars had a visionary, a father figure, who was driven by a social cause
and made it happen. In
1908, Sir Henry Ford, the greatest man in Auto industry, had put America on whee
ls with his black
affordable car and proudly said to the world, "I have built a car for the great
multitude. It will be large
enough for the family, but small enough for the individual to run and care for a
t a cost of $ 850.” Adolf
Hitler in 1938 sketched out his idea of a People’s car, based on which Dr Ferdin
and Porsche engineered
into the World’s number One - the Volkswagen’s Beetle. He said to his countrymen
, “Five Marks a week
you must put aside – If in your own car you want to ride." Following close on he
els, was Citroen 2 CV
designed by Joules Boulanger who replaced the tedious horse cart for the farmers
of France. In 1957, yet
another carmaker though of giving mobility to the Italian masses by manufacturin
g FIAT 500. Now it was
Ratan Tata who resolved to give India and the world its cheapest people’s car.
Since then there was no looking back and on March 23, 2003, at the Geneva Motor
Show, Ratan Tata made
an announcement that Tata motors will make the world’s cheapest car at a price o
f $ 2500.
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Taking a snap shot of the milestones, of changing a big idea into a small car, o
ne marvels how Ratan Tata
made an impossible dream possible.
Milestones in Nano Journey
Nano a