Tata Nano - An Example of Operational Excellence

From high-end luxury cars on one end to cheapest car Nano at another, Tata Motors is stretching its arms too much. With all this they are not only giving nightmares to their competitors but also redesigning new set of competition.

Ratan Tata had a dream to offer millions a car as a substitute to two-wheelers and Tata Nano is a result of that dream. Despite of all challenges (protests by local public backed by opposition government and water logging in the plant site, costs overrun by Rs. 3 billion ($71.4 million)), Tata Motors is firm on its plan to launch this low cost legend in the month of October this year.

Nano is a result of decade long planning and hard work and is an example of operational excellence and generated a huge global interest. After its successful display at Auto Expo, Delhi and Geneva Motor Show this year Tata Motors is flooded with global enquiries to set up Nano plant, "Nano has received enquiries for setting up plants and distribution networks from countries from US, Latin America, Europe and South East Asia", Company Managing Director of the company Ravi Kant told reporters “It is great sense of pride for everybody", he said adding "Nano has changed the rules of the market”, though company has made it clear that its focus would remain the domestic market for the first couple of years and in future Nano can be taken to Africa and Latin America.

Tata Nano, inspite of low cost ($2500) in no way can be assumed “just a compromise”. It is a car with 2 cylinders, 623 cc rear engine and rear wheel drive and its fuel economy could be a boon for most of its owners, 20 kilometres per litre i.e. 5 L/100 km, 47 US mpg, 56 UK mpg.
Nano is a 33 PS (33 hp/24 kW) @ 5500 rpm and its engine employs Bosch multi-point fuel injection. It will be able to reach a speed of 0-43mph (70 km/h) in just 14 seconds.
For the purpose of cost cutting, cars are planned to be sent out to dealers in knocked down condition and will be assembled there. So even here costs can be kept under control but quality control at the dealer’s end might remain one of the bigger challenges
Before entry, Indian market is full of speculation and dynamics are changing rapidly, it is assumed that with the launch of Nano, prices of some used small cars could fall even up to 10%. Sales of used cars in India are estimated at 1.6 million units in 2007-08, about 100,000 units more than all new cars sold. Some 80-90% of the transactions in the second-hand car segment still happen in the unorganized sector, facilitated by an estimated 2,000 brokers.
According to a report by a consultancy firm Cap Gemini “markets such as the US and France, the used car segment is as much as 2.5 times larger than the new car one” and it’s assumed that in India used car segment may reach 2.7 million units by 2012-13.
Inspite of all this, domestic car leader Maruti Suzuki does not expect much of competition coming from Nano and they are confident that by it’s entry, only market size will increase. It will not eat away with there share of market and in-fact it will hit hard on two wheeler sales.
Coming time will tell whose share Nano will eat and what changes it will bring to global engineering, one thing is sure Tata Motors aims to rule roads, and in all respects is cruising in the right direction…