Saturday, August 04, 2007

The Tata Car

A recent edition of Business World ( a popular biz magazine in India) had a cover story on the Tata's mass market car.
It tried finding answers to various questions.....from the design, look of the safety environmental concerns etc.

Do check out the story here:

Some interesting points from the article:

Tata Motors is putting in place a distributive manufacturing plan for its Rs 1-lakh car, where dealers spread across the country will receive car kits that they will assemble in local workshops for their customers.

While most cars today are front-engine designs, the Tata dream car will hark back to the first-ever “people’s car”, the Volkswagen Beetle, and sport a rear-engine. And at a time when the market is gravitating to high-powered engines, with even entry models from Maruti moving from 800-cc engines to 1,000-cc-plus engines, Tata’s car will have only 667-cc of power — not much more than the 500-cc powering Royal Enfield’s Machismo motorcycle.

A low cost car, by its very nature, is unlikely to have a net margin of more than 5 per cent (Rs 5,000 per unit). At that level of profitability, Tata Motors would need to sell at least 4 million units to recoup the $450 million it is estimated to have invested in the small car.

There are concerns over the ultra-low cost car’s quality, safety and emission standards. Since Tata Motors has had to squeeze out every penny from suppliers’ manufacturing costs, potential customers are now questioning the reliability of the parts they will deliver.

The car would use plastics, steel and non-ferrous alloys.. But industry sources say the car will make more use of cheaper plastics and composite materials than any other vehicle on the road, mostly in an effort to keep the car light

A unique distribution system:

Ratan Tata insisted the small car would be built using a distributed manufacturing system. Under this, a completely knocked-down kit of the car will be built at three Tata-owned plants.The kits will then be ferried to warehouses across the country, where they would be assembled by dealers. The idea is that a dealer would have a warehousing terminal to house the semi-knocked down kits, an assembly plant and a sales office where a few vehicles will be displayed. As soon as a customer placed a firm order, the dealer would withdraw a kit from the warehouse, assemble it at his plant and deliver it to the customer. This is unheard of in the automobile industry, especially since multiple manufacturing locations require multiple vendor bases, which affect the viability of suppliers due to the additional capital expenditure of setting up the plant. The closest example of a similar practice is in the furniture business, where small packages of home furnishings can be assembled at home with little help from the manufacturer.

Tata hopes to make use of the first mover advantage

Environmental Concerns
According to the Asian Development Bank (ADB), the number of cars in India will triple to eight million by 2015, spewing out 319 million tonnes of carbon dioxide. That is 88 per cent more than current levels.



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