Friday, December 10, 2010

Tata's Nano Experiment: Lessons Learned?

The Tata Nano experiment was a very noble undertaking. Ratan Tata, the Chairman of Tata, is said to have tasked his engineers to build an affordable car for Rs. 100,000. This is the repeat of the Volkswagen undertaking, which was to create the "people's car." When Fiat came to the United States market, it came with low end 128's aimed at students and new graduates taking their first jobs. The first Datsuns weren't bad, but they were cars powered by motor cycle engines. When the Yugo came to these shores the mission was the same: affordable transportation that would launch a brand and open up other market segments.

What went wrong in all these cases? First and foremost, they were all lousy cars, but the Volkswagen's were the best of the lot. Mr. Tata should have modified his charge to his engineers: "Build me a Rs. 100,000 car that's safe, reliable, fun, and that you and your families wouldn't be ashamed to be seen in!" That would have ruled out the Fiats and the Yugo right away. The next, primary mistake is that these cars weren't really designed for their markets or their customers. The Fiats were badly underpowered and couldn't merge onto an onramp at 55 mph. The Yugo was a laundry list of disasters: incompetent, post-Soviet style engineering and low manufacturing quality were the real problems.

The Nano has the advantage of derivative styling that looks stolen from Nissan and others, but it's passable. The wheels are way too small, and the tires way too narrow for the awful Indian roads. Building small cars well is not a skill that confers itself automatically from being able to build light trucks or large sedans. It's a completely different engineering and consumer mindset. The Chief Minister of Gujarat is photographed supposedly entering the passenger side of a Nano in the NY Times, but judging from his girth and the opening of the door, he might have needed a shoehorn. Again, this is a design issue that a small car maker should be able to deal with.

The worst part of this story? The communications debacle. The Nano has been reported to have experienced a small number of fires. Instead of dealing with it quickly and decisively, foot-in-mouth disease broke out. First the company denied there were any issues. Beating a retreat from that untenable position, the company blamed the problems on "foreign electrical equipment." I'm sure that their supplier-partners loved to read that news. Just to be mensches about it, the company extended the warranty period marginally and said that they were going to improve the exhaust and electrical equipment, just for kicks. This pattern is the same one followed by Suzlon when their carbon fiber composite wind turbine blades failed on deployment in Minnesota. The excuses were just that. Not understanding the markets, not doing the homework, and not dealing with issues head on are present at every post-mortem of these commnication fires.

Tata will eventually get better, but the corporate mindset will have to become more open to change and listening to the market.

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