Tata Nano – Between Hell and Heaven

A month ago a friend of mine told me that he had just bought a brand new gaming computer which cost him around €2000. He’s the same friend that told me once, after he successfully got his driver’s license, that the money he had paid for driving lessons etc. was an investment for his future since he couldn’t afford a car in sound condition anyway. I didn’t know any better then but I do now. While recently doing some research I stumbled across an article that blew my mind.

A Comfortable Way to Carry Pigs and Geese

In my last entry, I tried to give a report on the African “mobile revolution” and the concomitant economic relevance for potential investors. I mentioned Spice Mobile and their intention to introduce what they call “The People’s Phone” in India. Andrew English’s article in The Telegraph however incentivized me to write about the Tata Nano also known as the one-lakh car, which was presented in 2009 as “The People’s Car”. As he states the Tata Nano was created to, first and foremost, serve India and China a low cost Car that, according to the income, even less fortunate people can afford. “The kind of people who previously climbed on a battered scooter, along with their entire family, a pig and a few geese”, English writes.

Specifications:

  • 2 cylinder SOHC petrol Bosch multi-point fuel injection
  • all aluminium
  • 4 speed synchromesh with overdrive in 4th
  • Length: 3,099mm
  • Hidth: 1,495mm
  • Height: 1,625mm
  • Weight: 600-635 kg

The World’s Cheapest Car

Tata Motors indeed came up with an approach that’s in a certain way comparable to the original function of the German Trabant only in another dimension. While the Trabant was supposed to serve 16 million people in the GDR, the Nano could firstly apply to up to 3620 million people in China, India and Africa. You might wonder how it’s possible for people that belong to the poorer half of our population to afford a car and Saveutasp.org provides you with the answer. According to its admin the Tata Nano got its name from the introductory “nano” price which was only about €1500 back in 2009 and due to the rise in production material has gone up to €2100 today. It’s considered to be the cheapest car in the world corresponding to Richard S. Chang.

What about Safety?

My first thought was: That car must be everything but safe. WRONG! Hank Green clarifies most of my doubts as he announces that the Nano passed the European Crash Test in 2009. In his opinion a lack of safety is a corollary of making cars smaller, lighter and cheaper but though the Nano is probably the nr.1 in all of these three categories, the results signify that it’s safe enough to be sold in Europe.

It’s not all Roses!

It may be “safe” but obviously not safe enough. Several fires have dominated the headlines and the “ex-wonder car” slowly turns out to fail its mission. “Quality issues are not new to Tata Motors,” says Abdul Majeed, auto practice leader, PwC and addresses an important point. Due to the increasing criticism, Tata Motors are in danger of losing its face and image. After an early hype the aggregated demand decreased reaching its peak in November 2009 when only 500 cars were sold in entire India, as Lijee Philip, ET Bureau quotes, a reaction of the Indian population to the recent problems.

Conquering New Markets

Nevertheless Tata Motors plans to expand its market to Europe and the US and has therefore made many efforts to revise the Nano in order to regain trust and success, not only in Asia but especially in the more critical western countries. Tata Motors also seeks to build a hybrid as well as a diesel version.

Another “Long-Tail-Story”

Like in my last post the case of the Tata Nano is applicable to the “Long Tail” theory which I explained back then. The idea of creating a low cost car that is affordable to poorer people but also meets all safety and customer requirements is highly profitable and far seeing. The second point might seem less important because electronic devices like radios, window motors are not needed in these countries but as you can see, neglecting safety requirements is a besetting sin that does not stay unpunished. I, personally, consider the Tata Nano as a first major attempt to create a people’s car in developed countries that so far has worked out quite well but could not totally fill the market niche. It’s been a sign for other though to invest in low cost cars and all the sudden you see plenty of low cost cars shooting out of nowhere.

The game is still on! Who’s going to build the people’s car of the world?