In a gloomy economy and in an environment which finds the best automobile companies on their knees the Tata’s achievement in ensuring that the Nano was launched at the promised price of ~$2,500 is particularly commendable.
In terms of India’s business environment- the Nano could well represent a turning point for innovation. India has not really been known for producing innovative products and I cannot think of too many products that have caught the global attention. (although Indians have been working on cutting technology in the west and Indian engineers work on the R&D value chain in India). Here is a product that has been conceptualized and designed in India and by the looks of it will prove to be a disruptive product in the automotive industry.
Design and Innovation:
Achieving a price point of $2,500 takes so much more than just frugal engineering and by using one less wiper. Two things impress me the most – a) the continued focus on the customer: for example, despite its low price- the Nano is large and roomy (to probably accommodate the quintessential dadima) and b) Tata’s efforts in working with global suppliers such as Bosch at a much earlier stage and challenging them to rethink their designs.
Interestingly, the big three in Detroit (Ford, GM and Chrysler) have been getting a lot of criticism for a) not focusing on the customer and b) not being more flexible with the supply chain. The Nano’s effort also truly puts the emphasis on design and not on say manufacturing – something that the auto companies in Detroit have been guilty of. Going forward its going to be very interesting to see the sales breakup for the Nano – between first time car buyers v/s Nano being the second car and of course the sales in rural areas.
Ultimately, the Nano might not have a big impact on Tata’s revenues considering that Tata needs to sell 5 million cars by 2015. It is the idea that this might just be the first step in a completely different global automotive industry that makes it more interesting. (some thing that the Economist fails to grasp spectacularly)