It is a date with history for the worldwide Auto Industry. As the Tata Nano makes its way to the Indian Roads, India continues to be a rising star in the field of innovation and proved a point to the world. It became a success nearly 5 years after it was conceptualized and who else but Tata has led the way again. 100 years ago it was Tata who had a vision for India and now it was the turn of another Tata.

If we examine how the Tata Nano was a success, Differentiation from first principles comes to mind. During my high school Maths class I had understood it differently from the way Tata had applied it. They did not start with an existing car or a base model to build it. They had started from ground zero looking at each and every component. Instead of challenging existing standards which we are generally proud of doing, they went about setting new standards and had been successful in implementing them.

Spacious interiors mean successful implementation for Man maximum machine minimum philosophy where even the best automakers with their R&D have not come close to Nano. The tiny wheels give in an a turning diameter of 8 Metres which is the first of its kind. The low budget car has not compromised on any of the safety norms. Further it is BS III compliant. According to the first reviews it appears that the car has given much more than what was hoped for. The critics have been left in the cold as they had nothing much to say. There was however one comment on the engine sound and I found it hilarious. There was a remark that the engine made a sound like a lawnmover. I can assure you Mr. Critic that the prospective buyers are not going to Complain. On purchase of the car they would have achieved something which would have otherwise taken them another 5 years to achieve ie to own a car.

Now Tata Nano gets into the next realm of reality. To make the project financially successful is the new game altogether. Although the business plan would have been clearly figured out, maintaining this price would be a challenge. It would require continuous innovation. As the price tag and the brand is the main selling point for this vehicle it would be a lot more difficult for them to raise the prices in the future.

The Impact on the Economy is about to be humungous. The launch has already changed the rules of the Automobile industry. There is going to be an impact in the two wheeler segment and the small car segment. Maruti is planning to come out with the strip down version of the Alto to compete with the Nano. In my view this action would prove counterproductive. Cars should be allowed to retain the identities and cater to the respective segments. Nano has added to a layer without competing directly with any of the existing segments. Getting Alto on Par with Nano would result is sales in the Nano Segment but will also lose out on the Small car segment. The benefits would we only marginal and would not be worth the effort. Nano would definitely slip into the Indian Roads Chipping into the two wheeler segments and the small car.

Nano is likely to deal a death blow to the Used Small Car segment. Any one would prefer a New Nano rather than a used small car. This is likely to impact the sales of Small car as wee as people who are buying for a short term 3-4 year periods are likely to refrain from buying a small car. There is not much talked about the used car market, but there would be a high impact.

Another Area which is not talked about is the “three wheeler Auto RIckshaw” market. It is possible that many of these drivers may shift to a “Nano Taxi” and earn good returns.

It is raining nanos all the way now. But it may take some time for everything to materilaise and for the production to meet the demand. It will take a long time for Nanos to flood the roads and capacity is still an issue. Thanks to Mamta Bannerjee and the Singur fiasco the nano cycle is taking longer. As mentioned in my previous article about the easing of the Global slowdown the timing of Nano may just be perfect.

Hopefully we will now see the new era in the Indian Auto and World Auto soon.