The TATA Nano. To create a $2,000 “people’s car”I t
I love the insights from this BusinessWeek article and Professor Govindarajan’s blog on the product and social innovation of Tata Motor’s new car: The Nano.
The idea came from Ratan Tata, Chairman of the Tata Group, when he wondered if there was a way to create a safe, affordable, all-weather vehicle for Indian families who typically get around on two-wheels. He describes a scene where, ”the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby.”
His solution was to dream up the Tata Nano, a super cheap car that would meet the needs of the 75% of the Indian population who still travels using these unsafe “open air” vehicles.
What makes it tremendous is that the entire car is $2,500–less than a new 17′ MacBook Pro. Its closest competitor is another Indian company, that is still roughly twice as expensive as the Nano.
Tata Motors is also cutting out the middleman in their go-to-market strategy. Their modular design allows for the manufacturing of kits which can then be assembled locally by thousands of entrepreneurs–saving on costs and providing a distribution network of manufacturers and evanglists while providing jobs. *As Vijay points out, it is like what IKEA did for the furniture industry.
Tata notes, “this approach would replace the dealer, and therefore the dealer’s margin, with an assembly-cum-retail operation that would be combined with very low-cost service facilities.”
This shift is tremendous and represents another step towards mass customization of the automobile. This adds to Tata Motors’ holdings, who in 2008, acquired Jaguar and Range Rover.
The company has also disclosed that it is working on an electric version of the Nano in Thailand.
