Indra’s Drishtikona (Viewpoint)

Tata’s People’s Car

Posted : September 28, 2005 at 10:26 pm [IST]

I had written about this project earlier too and was closely following it because of my manufacturing engineering background and special interest in manufacturing sector. Tata Motors played a pioneer role in car manufacturing for two reasons. It proved that a good truck manufacturer could build a good car too. And secondly it also established that an Indian company could compete with global automobile manufacturers in liberalized market. When people from industry were skeptical about the ‘Rs1-lakh car’ project, I was very clear that it was possible. I had made my views clear in my entry at that time too.

In 50s, we heard of the people’s car at Rs 10,000. Hindustan Motors and Tata Motors (TELCO in those days) had come out with a proposal. I was asked about the project cost for a car like that sometime in 1976. As I remember, I gave a figure of Rs 400 crore for 1,00,000 a year. Sanjay Gandhi came out with a similar priced car for his project in those days. The same plant started producing ‘Maruti‘ later on.

By 2008, Tata Motors will launch the revolutionary entry vehicle for around Rs 1 lakh. It will meet emission and safety norms too. It is one of the most challenging feats in automotive history after perhaps Henry Ford’s T-model for the Americans. No one believed Mr. Ratan Tata, when he talked about it some years ago. He revealed recently how The ‘One-Lakh Figure’ started going around. In his words, as appeared in ‘Business Today’, the story goes like this: ” It was imprinted in the media by one of the journalists to whom I talked about the small car in large volumes and he asked at what price would the car sell. I said it would be about 1,00,000 rupees or so. This was blown out of proportions. So, rather than getting distressed, I took up as a challenge.”

But engineers at Tata Motors perhaps are nearing the goal. The prototypes are running (without the body). They ‘are going to start productionising the car’. The car will be with rear-mounted engine to save on the constant velocity joints, and a continuously variable transmission (CVT). Italian design house IDEA that did Tata’s famous ‘Indica’, is helping in styling. Tata Motors is planning to invest up to Rs 30, 000 crore in the next few years. In the next two-and-half to three years- by 2008 the car would be out.

The whole project is challenging, but not impossible. Some technical and managerial innovations will make it possible. Tata Motors is to produce the car at Rs 70,000 to be able to sell it at Rs 1 lakh. If the weight of the car ends up between 700-800 kg, one can calculate the cost per kg of the car. The engine and transmission roughly accounts for 24-28% of the cost. Skin and electrical account for another 7-9%, while suspensions and wheels along with brakes will come for another 9%. The interiors depending on the choice may cost about 6%. Body engineering, whether it is steel or engineering plastic, spot welded as traditionally done or will use newly innovated adhesives. (A medium sized car requires about 5000 or so spot-weldings using robots and deciding the tact time.)

And remember the car is not a steel shell only. It is technology, investment, scale and so many things, if it is from a new manufacturing plant. A new business model of incremental addition of capacity by creating assembly franchisers in different states is also on card. The government must also contribute in this project by reducing the tariff for the cars in this segment as Japan does.

The project shows a roadmap for the manufacturing sector to go for a big push and shake off the myth of ‘missing the bus’ of manufacturing, while talking about the competition with Chinese in manufacturing. Indian manufacturing is to build its innovative superiority both in product offerings and manufacturing management. It can win the race still and soon.

P.S. See a $100 laptop.

- Indra

Category: Manufacturing |