Rs 1-lakh Tata car to hit the market in three years
Friday, November 11, 2005
Targeting the burgeoning middle-class, Tata Motors will roll out in the next three years its Rs one-lakh car ($2200) involving a low-cost assembly operation, according to Tata Group Chairman Ratan Tata.
“(The car) will be smaller and will be produced in larger volumes, with all the high-volume parts manufactured in one plant…Targeting the larger part of the income pyramid is an important part of what Tata will be doing,” the 67-year-old corporate honcho said in an interview to McKinsey, a consultancy firm.
The other cost-cutting devise relates to intensive use of plastics on the body of the car and eliminating the margin of the dealers. “We’re also looking at more use of plastics on the body and at a very low-cost assembly operation, with some use of modern-day adhesives instead of welding,” he said.
“The car is in every way a car, with an engine, a suspension, and a steering system designed for its size.’’ Mr Tata said the small car will meet all the emissions requirements. ’’We now have some issues concerning safety, mainly because of the car’s modest size, but we will resolve them before the car reaches the market, in about three years’ time.’’ Dubbed as Mr Tata’s ’dream project’, the Rs one-lakh car has generated immense interest in the Indian auto market, where Tatas’ current lowest-priced car is Indica with a tag of Rs 3.3 lakh.
Mr Tata said in view of the socio-economic dimension in manufacturing the car, the company was looking at small satellite units, with very low break-even points, where the cars would be assembled, sold, and serviced.
’’We would encourage local entrepreneurs to invest in these units, and we would train these entrepreneurs to assemble the fully knocked-down or semi-knocked-down components that we would send to them, and they would also sell the assembled vehicles and arrange for their servicing,’’ he said.
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, Mr Tata added.