India's Megafactories - Tata Nano Production

  • 7 years ago
The Tata Nano is a city car manufactured by Tata Motors. Made and sold in India, the Nano was initially launched with a price of one lakh rupees or ₹100,000 (US$1,600), which has increased with time. Designed to lure India's burgeoning middle classes away from motorcycles, it received much publicity. After having successfully launched the low cost Tata Ace truck in 2005, Tata Motors began development of an affordable car that would appeal to the many Indians who ride motorcycles. The purchase price of this no frills auto was brought down by dispensing with most nonessential features, reducing the amount of steel used in its construction, and relying on low cost Indian labour. The introduction of the Nano received much media attention due to its low price. Expectations created for the car during the run up to its production may have been out of proportion with its realised success. A 2008 study, by Indian rating agency CRISIL, thought the Nano would expand the nation's car market by 65%, but, as of late 2012, news reports have detailed the underwhelming response of the Indian consumer to the offering; sales in the first two fiscal years after the car's unveiling remained steady at about 70,000 units although Tata appears intent on maintaining a capacity to produce the car in much larger quantities, some 250,000 per year, should the need arise. It was anticipated that its 2009 debut would greatly affect the used car market, and prices did drop 25–30% prior to the launch. Sales of the Nano's nearest competitor, the Maruti 800, fell by 20% immediately following the unveiling of the Nano. It is unknown if the Nano has had a lasting effect on the prices of and demand for close substitutes, however. In July 2012, Tata's Group chairman Ratan Tata, who retired in January 2014, said that the car had immense potential in the developing world while admitting that early opportunities were wasted due to initial problems. Tata Motors announced in 2006 that the Nano would be manufactured in Singur, West Bengal. Local farmers soon began protesting the forced acquisition of their land the new factory entailed. Tata first delayed the Nano launch and later decided to build the car in a different state, Gujarat, instead. Announced as the most affordable production car in the world, Tata aimed for a price of one lakh rupees, or ₹100,000, which was approximately $2,000 US at the time. Only the very first customers were able to purchase the car at that price, however, and as of 2017, the price for the basic Nano starts around ₹ 215,000. Increasing material costs may be to blame for this rapid rise in price. Compared to the Volkswagen Beetle it has a relatively low price, however. In 1990, a Beetle from Mexican factories was priced at $5,300, about $9,716 in today's money. The Ford Model T's initial price was about $850, equivalent to $22,657 today. The price of the Nano is only just higher than the corrected Price of the Briggs & Stratton Flyer with the Flyer costing US$125 ($1,767 in 2016), even though the Flyer would today hardly be considered a gokart. The second-generation Nano was expected to be sold in the United States by 2015. The original Nano is not street legal in the US, and cannot legally be sold as a grey market import until 2034, when the original 2009 models receive a 25-year exemption from the US Customs and Border Protection. Despite a readily-available dealership network in the US through the Jaguar Land Rover division of Tata, Tata Motors will not use Jaguar Land Rover to sell the Nano. While the Nano is driven by a petrol engine, several more-radical powerplants have been proposed but not put into production. Also, an upscale version was shown at an autoshow. Tata Motors signed an agreement in 2007 with a French firm, Motor Development International, to produce a compressed air car Nano. While the vehicle was supposed to be able to travel approximately 200 kilometres (120 mi) on $3 US of electricity to compress the air, Tata's Vice-President of Engineering Systems confirmed in late 2009 that vehicle range continues to be a problem.

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