Monday, Jan 14, 2008
India's Tata Group Says it 'Shrunk the Package' to Make Cheap Car
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India's top vehicle maker Tata Motors says it "shrank the package" but did not compromise on safety to produce the world's cheapest car, slated to hit the roads later this year for just 2,500 dollars.
 Ratan Tata drives the new Tata "Nano" car
© AFP Manan VatsyayanaTata Group chairman Ratan Tata, who unveiled the sporty Nano amid forecasts it could revolutionise how millions travel, said it reduced the price by making the car smaller and cut input and other costs to the bone.
"We shrank the package -- we used less steel, less materials, we resorted to a smaller engine," he told reporters late Thursday at an auto show here where the car was unveiled to deafening cheers and applause.
"And so it was less costly," said Tata, whom the Indian media have likened to US automobile pioneer Henry Ford.
The four-door, five-seater whose sporty looks defied pre-launch predictions it would be little more than a "motorised bullock cart" is just 3.1 metres (10 feet) long, 1.5 metres wide and 1.6 metres high.
"We haven't taken any shortcut in either emissions or safety," said the 70-year-old Cornell-trained architect who helped design the car along with a team of "young, bright" Indian engineers "who had never done" such a project.
The car "will meet all the current safety requirements... and will have a lower pollution level than even a two-wheeler manufactured in India," said Tata, scion of one of India's blue-blood business families.
 Ratan Tata addresses the media after unveiling the new Tata "Nano" car
© AFP Manan VatsyayanaThe minicar, developed over four years, will also meet strict Euro IV emission requirements and a diesel version of the vehicle, nicknamed the "People's Car," will be introduced later.
The car is due to go on sale in the second half of the year for 100,000 rupees (2,500 dollars), excluding tax -- a stark contrast to the costly Jaguar and Land Rover brands Tata Motors is expected to buy from US auto giant Ford in coming weeks.
The Nano -- so named Tata said because it "connotes high tech and small size and is easy to say in English and in Hindi" -- features a two-cylinder 623 cc, rear-mounted engine with a top test speed of 105 kilometres (65 miles) an hour.
It will get 20 kilometres to the litre or 50 miles to the gallon.
Tata revealed no cutting-edge developments but said the group had filed for 34 patents on the car, aimed mainly at millions of consumers who are not middle class by Western standards but no longer at the bottom of the pyramid.
The basic model has a four-speed manual transmission and no air conditioning, electric windows or power steering, although two deluxe versions will be available with such features.
As part of the cost-cutting, the speedometer is in the dashboard centre over the air vents, not behind the steering wheel, to reduce parts. Also Tata cut long-term deals with suppliers to win better terms.
The car takes up eight percent less road space than its nearest budget rival, the Maruti 800, made by India's largest carmaker Maruti Suzuki, owned by Japan's Suzuki Motor. But the interior is 21 percent roomier than the Maruti 800 and half the price.
"It's a good-looking car, it's a great achievement," said Indian auto analyst Murad Ali Baig.
 People crowd around the Tata "Nano" car
© AFP RaveendranTata started thinking about an ultra-cheap car when he saw families riding on two-wheelers -- "the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby."
"I was told the death rate (for two-wheel riders) was three times that of those in cars," he said.
At first, he doodled on a sketch pad how to make two-wheelers safer -- "by putting two wheels at the rear to make it more stable."
Then he decided to make a "standard car."
Making a profit on the basic version might be hard as commodity prices soared during the design period, he said, declining to say how long the 2,500-dollar price would remain.
But the company kept an earlier pledge to sell the car at 100,000 rupees because "a promise is a promise," he said.
"There will be several uptrend versions of the car and we will have our margins spread" over the various models, he said.
"It will not be an immediately profitable venture -- it will take a longer time to break even," said analyst Vaishali Jajoo of Mumbai's Angel Broking.
The new car arrives amid government forecasts that auto sales will more than quadruple to 145 billion dollars by 2016, fuelled by a fast-growing economy and greater consumer affluence.
Tata said the company, which expects eventual annual demand of about one million units, will focus on India for the next three years before taking the car to Latin America and other emerging markets.
"Our challenge has just begun."
©AFP
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