‘Nano’- A Great Opportunity and Many Challenges

I was talking to Anand Friday night. They got a new vehicle big enough to accommodate the expanding family. Naturally, it means more on gasoline cost. All the big vehicles consume much more gasoline. It is quite a deterrent for the present gas price in US that has almost doubled in last three years, as Anand informed. Anand excitedly talked about the Tata Motors’ Nano and its low fuel consumption that he has heard and read about in media. Many households in US can think of having a ‘Nano’ in their fleet as an addional vehicle for a short run or single drive for some shopping or routine chores around the residence.

Every automaker in Japan developed and sold small cars for the women in the Japanese households. Bigger cars were for long drive or for use to keep the status in tact. Japanese small cars had all the sophistications unlike India where all the manufacturers did away with all those features to cut down the cost and the price to the consumers. Suzuki in India also did the same with its Maruti 800 model.

Perhaps the festivities of the coming Durga Puja or Dessehara in India will get a booster with the appearance of Nano -the ultra cheap car of Tata Motors that has enhanced the prestige of Indian manufacturing capability globally. The Nano also became a hit at the Geneva Motors Show, and brought admiration for the Tatas to come up with a cost effective product. As I understand millions of people are waiting for Nano’s availability. And why should not they be? The younger generation of a farmer requires sparing the produce of only 2 acres to buy a Nano. With improving rural roads, Tata Motors must cash on at least few potential customers in each of the six-lakh villages of the country and that will run in million.

Tata Motors has taken too much time after it launched Nano in January 2008 at Auto Expo in Delhi for coming out commercially in the market. It could have taken a different strategy to come out with the first 1,00,000 cars in one of its existing plants for faster market entry, if it had a freeze on its design or through simultaneously work on manufacturing facilities. It could have got the first timer advantages. Moreover, the recent spiraling inflation will certainly impact Nano. If Tata Motors keeps the prices even after providing for the vendors as it has promised, it is great job almost like a magician on cost cutting through value engineering and innovations.

I still don’t understand the Nano pricing. Even the depreciation and interest cost on the huge investment of Rs 1700 core that as reported has gone up to Rs 2000 core will be considerably significant. For that matter, Suzuki Maruti with its plant totally depreciated can always cut down its price of Maruti 800 to the level of Nano, though it keeps on brushing aside Nano competition.

Durga Puja is just few months away. But if market accepts Nano warmly, the volume build up must be fast along with the creation of infrastructure for handling the services for rural market. As the market expected, Tata Motors will be using a distributed manufacturing strategy to make Nano available to its prospective customers in every part of the country.

But as it appears, Tata Motors has restricted itself to Singur for manufacturing, perhaps as some sort of commitment to Buddhadeo Bhattacharya. Somehow with my bitter experiences of the work culture with the leftists unions, I am still not sold on Singur as the right choice for Nano manufacturing. Perhaps, Tata Motors might have kept some of the plans secret. In the mean time, according to the media reports, Tata Motors is seeing a huge global interest with enquiries pouring up for setting up plants from countries like the US, Latin America, Europe and South East Asia. What a pride moment!

I wish Nano to set a record performance to boost the image of India’s manufacturing capability on the line of T-model of Ford or Beatle of VW. I dream of many dedicated ships carrying Nanos and its variants to different parts of the globe. Can Tata Motors do it? It will certainly be possible, if Tata Motors can keep the quality of the cars to the global standard and keep on innovating to remain the best in its class. Competition will come for Nano, may be sooner if it succeeds. And it may be not only from Bajaj Renault Nissan combination as reported in press, perhaps the Chinese will be faster with their Nano’s fakes, may be as ‘Bano’.

Let the Indian manufacturing excel through Nano.
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PS Latest from Rattan Tata: New Nano model underway to fight fuel price hike

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