Tata Motors Meets History Again

Tata Nano has been hailed as a path breaking innovation for the Indian automotive industry. Tata Nano has made innovation and price limit part of car development process across the world. Many world class companies have evinced interest to develop cars similar to Nano. It has been hailed as the biggest innovation in the recent times for automotive industry across the world.

Tata Nano is a small car but its proportions belie its big ambitions. Currently, it is the most ambitious project for Tata Motors which will help take it to the next decade. However, it is not the first time that the company has created so much enthusiasm.

This is not the first time that Tata Motors has introduced low cost cars for India. Tata Indica revolutionized mobility in India. It hit the roads more than a decade ago and still remains a strong contender in the small car category. The early Tata Indicas were priced just above Rs 2 lakh to make it affordable to a large section of car buyers in India. The same continued to be made available in different forms such as Indica Xeta, Tata Indica V2 and the luxurious Tata Indica Vista.

When Mr Ratan Tata thought about making the first indigenously developed car, he had big plans. He wanted to give Indians an idea of making a car with an internal space of Ambassador, the exterior size of Maruti Suzuki Zen and pricing of Maruti M800. In 1998, he launched the new car he called Indica. It was an instant success.

Again, Mr. Ratan Tata thought of Nano car as his dream car in 2004. He announced a price tag of Rs 1 lakh for the car much before it was developed. After four years of hard work the car was displayed to an eagerly awaiting worldwide audience. The price tag remains the same. Since there was a huge gap in the time that Tata had announced the price and it was finally launched, everyone thought that Tata Nano prices would shoot above the Rs 1 lakh price tag. However, Tata Nano managed to retain the price range. Mr Tata said that a promise was a promise.

Note that when the Tata Nano development began at the same time global commodity prices rose. To beat the widening price gap in inputs, Tata Motors made great innovations in car construction to retain the price bracket.

Consider this when Tata Nano and Indica, were launched the country was under severe economic strain. When Indica launched it was a success story for certain. Tata expects Nano to repeat the story again.

The company fared similarly at the time of launch of both these cars. Prior to launch of Tata Indica, Tata Motors had reported a massive losses, its worst since 1945. In 2008-09 it has again reported a 50 percent loss in profits, one of its worst performance.

The launch of Tata Indica signified the change of path from commercial vehicles to passenger cars. The launch of Tata Nano is symbolic of opening new markets and new entry level prices for car buyers in India.

Indica's launch signified the metamorphosis of a commercial vehicle manufacturer to a passenger car manufacturer. The launch of Nano symbolizes creation of a new price point and a possible new market segment in the industry. Unlike Indica, Tata Motors does not want to allow Nano cars as cabs this time. It may pave the way for a new future for Tata Motors and the Indian automotive sector.