How Tata built the $2,500 car
'Zealous' suppliers may have assembled new way to design low-cost cars here
Jesse Snyder
Automotive News
January 14, 2008 - 12:01 am ET
NEW DELHI — Tata Motors' celebrated $2,500 minicar — rolled out here last week to global fascination — pools the clean-sheet, cost-cutting ideas of dozens of suppliers, and might be a blueprint for how to design low-cost cars in America.
This is not a doorless, motorized rickshaw with canvas top — the kind of ultracheap transportation some cynics expected to see Tata show at the Auto Expo here. Instead, the Tata Nano is a stylish four-door, five-passenger vehicle, about 23 inches shorter than a Honda Fit. And Tata Chairman Ratan Tata says the company nailed its now-famous price target.
How? With a concept some analysts describe as "Gandhian engineering" for its extreme frugality. The Indian automaker turned legions of eager suppliers loose on a challenge, using an unconventional but highly focused process.
"Everybody is unusually zealous," said Mohan Narayanan, head of application engineering for Federal-Mogul Goetze (India).
After years of secrecy, details of the vehicle emerged last week. As expected, Tata left no cost-cutting stone unturned.
For example, the 33-hp, 50-mpg Nano has a single windshield wiper; and the base model has no radio, power steering, power windows or air conditioning. The instrument panel is rudimentary — just speedometer, odometer and fuel gauge. The 12-inch wheels need just three lug nuts. To save cost and weight, the Nano's 624cc, two-cylinder gasoline engine has a single balance shaft instead of one per cylinder.
Ratan Tata said that the base price to dealers would indeed be 100,000 rupees (1 lakh), or about $2,554 at current exchange rates. But he said that didn't include the car's 12.5 percent value-added tax or delivery charge. And Tata expects to sell better-equipped versions for a lot more.
The Nano would not pass U.S. emissions or safety standards and will not be shipped to the United States. But Western automakers could mine its cost-cutting ideas and philosophies.
Tata and its parts makers, including several Western companies, ignored a host of assumptions about how to design, build and source vehicles. Indeed, suppliers stepped up, getting involved early and innovating from the ground up.
"We had about 100 suppliers on the project that made as big a contribution as our own development team," said Girish Wagh, head of Tata's 500-person Nano development group for the past four years.
Teeny Tata
How tiny is Tata's new Nano? Here are the numbers.
Length: 122.1 in.
Width: 59.1 in.
Height: 63.0 in.
Seats: 5
Engine: 2-cylinder, 624cc
Horsepower: 33
Top speed: 64 mph
Fuel economy: 50 mpg
Curb weight: 1,278 lbs.
Art of the possible
Tata Motors CEO Ravi Kant said it was easy to pick Nano suppliers.
"Some get the target challenge, and some say it is impossible," Kant said. "Bosch Automotive CEO Bernd Bohr took the challenge and said 'yes, we'll do it.' "
Bosch won several major contracts by redesigning mature technologies into new products that are smaller, lighter and less complex, said Ninan Philip, deputy general manager of Bosch Mico Motor Industries in Bangalore, India.
For example, Bosch's 35-amp generator for the Nano weighs about 12 pounds, slightly smaller than the normal 40-amp, 13-pound model.
Bosch also adapted a motorcycle starter motor for the Nano to save more weight, said Sanjay Khatri, Bosch senior sales manager.
And Bosch didn't just remove 700 of the 1,000 functions of its European-market engine control module; it shrank the electronic chip and its housing. The German supplier also redesigned sensors to reduce size and weight.
The redesigned throttle-position sensor can be half the size because Bosch substituted a more sensitive material in the pressure plate.
By reducing the weight to 1,278 pounds for the base Nano, the car needs less equipment to operate, said Wagh. The engine can have two cylinders instead of three or four.
The approach works elsewhere, too. Small 65R12 tires and wheels use less material.
Early involvement
Suppliers got involved early. Rico, an Indian engine-block and cylinder-head caster, advised Tata even before the project team decided whether the Nano's base engine would be two or three cylinders.
"The range was from 550cc to 750cc," said Vikas Saxena, Rico's assistant general manager for business development and project management. "So when the answer was 624cc, it was a very close decision on how many cylinders to use."
Other cost-saving ideas went into the project. For example, Tata may bypass dealers and sell cars directly to buyers, to reduce logistics costs. Instead of shipping finished cars to dealers, it would ship kits of mostly assembled modules to satellite minifactories that would complete assembly. Buyers would pick up the cars at the factory gate.
Tata picked an undeveloped state in eastern India to build the Nano plant. The West Bengal regional government streamlined the construction process for the Singur site and leased the site to Tata for free.
The Nano will go on sale in India this year. Initial capacity will be 250,000 units annually, but Tata is considering export to countries in Africa, Southeast Asia, Latin America and Europe. Nano suppliers say they have been told to prepare for India production capacity in incremental stages of up to 500,000 — and up to 500,000 more for global markets.
Ratan Tata acknowledged last week that he sometimes doubted the automaker would hit its price target or timetable. But he challenged a journalist's reference to Tata's "1 lakh" price promise.
"I never made that promise; the media did," he said, recounting how his low-cost car project became the "1-lakh car" only after a headline writer called it that.
"But I kept the name as a way to challenge us."
