Competition to nano? Toyota IQ : Small Car

While not a threat to Tata Nano in terms of price, Toyota's new mini-car concept, the IQ, was unveiled at the Frankfurt Motor Show. The IQ is only 2.98 m long which makes it about a foot longer than the Smart For Two. While the Smart is strictly a two seater, the Japanese mini is advertised as a 3+1 seater. That means there are two seats that can be inhabited by adults in the front.

The asymmetrical dashboard design allows the front passenger seat to be pulled forward, allowing another adult and potentially a child to sit in the back hence the + 1. No information is available about what kind of drivetrain the car might include other than it's location at the front of the car. The IQ may go on sale in Europe as early as 2009 and would likely have an engine in the 1.0L range.

Tata Nano - OEM, Supplier Relationship

(source :SupplierBusiness.com newsletter, 14th January)
Tata divided the components into two types – proprietary designs and Tata Motors design. For proprietary design components, Tata went with established suppliers such as Bosch (which supplies the engine management system and has significantly contributed to the future diesel engine). Bosch split the development between its design centres in Bangalore and Germany. Using local design capabilities was a crucial decision, as most global design centres were accustomed to designing high-end systems, employing development staff at a significantly higher wage levels.

For components and systems designed in-house, Tata Motors chose suppliers with strong process capabilities who could give valuable suggestions and improve on the designs. Nearly everything has been sourced locally and the Nano will have 97% local content from day one. Tata’s supplierswere an integral part of not only the design and development process, but also purchasing.

While Tata started work with 600 suppliers and a total of 1,800 supplier-part combinations, these were eventually narrowed down to 100 suppliers for the platform.

Hydro-forming is used for all the Nano’s tubular structures, resulting in weight reductions and simple production processes and stamping has been replaced by roll-forming process. Roll forming allows a common tooling for a number of parts, fewer operations and better productivity. Tata not only worked on its own processes but also helped its vendors innovate.

Cost saving was also achieved by using thinner materials wherever the design allowed, so the bumpers are only 2.5mm thick, against 3mm on the Tata Indica super mini.

Half of the 100 vendors for the project are co-locating with Tata in a 350-acre vendor park in SIngur next to the new Tata plant. Instead of annual contracts, Tata went with long term volume contracts with its suppliers, driving down the costs even further. The suppliers received significant volume commitments from Tata Motors, with about 75% of the components being single-source and about 90% of the total car being outsourced.

A three-shift operation and consolidated purchasing with suppliers allowed for a further reduction in costs.

While the first plant at Singur will eventually have a capacity of 350,000 units, Tata wants to set up three other plants in different parts of India to sell a million units per year eventually. With four plants in various locations, the company aims to save significantly on logistics and inter-state taxation.

Tata’s current challenge is to have all the suppliers in the vendor park up and running by the start-of-production of the plant. With the Nano, Tata is aiming for a less than 100 ppm rejection rate (better than existing Tata plants) and a ten-fold improvement in warranty costs.

Primary focus - two wheelers

The family two-wheeler, which is in the range of 75-125cc, costs Rs 35,000-50,000. This segment accounts for 92% of the two-wheeler market in India in terms of sales. With the launch of Nano (supposed to cost Rs 100,000 + taxes), the spillover will happen from this two-wheeler market to Nano.

How Tata Nano stacks up Vs other historic low cost cars

10% of two-wheeler market?

Speaking to CNBC-TV18, Anand Rathi - Automobile & Transportation, said that almost 10% of the two-wheeler market may shift to Tata’s new Rs 1 lakh car. He said, “ The car is priced at Rs 1 lakh and one look at the dealer margin and if we add the VAT the registration charge, the base model could workout to be Rs 1,30,000 lakh on road.With a Rs 30,000 down payment, you can take a loan of around Rs 1 lakh and EMI works out to be around Rs 3,716 per month. With just Rs 3,700 per month on an EMI, I believe anybody can afford this product. As far as the shift is concerned, initial estimates is around 10% of the two-wheeler market can actually shift towards the small car.”

Competition to Tata Nano - Maruti 800

Maruti 800 is a city car manufactured by Maruti Udyog in India sold at around $5000. It is a rebadged version of a Suzuki Alto. It has a 3 cylinder engine of 37 bhp (28 kW) at 5000 rpm.

It used to be the largest selling car in India until the Maruti Alto recently took that title. It is also exported to a number of countries in southeastern Asia including Bangladesh and Sri Lanka, and to some South American markets (as Chile, sold as Suzuki Maruti), and was available in selected European markets between 1988 and 1992, sold as the Suzuki Maruti. The car comes in different versions including one with air conditioning and one without. It was launched in December 1984 with almost 100% imported content.

Competition to Tata Nano - Bajaj Small car

Bajaj silently unveiled its 'Lite' concept car in New Delhi, two days before the much hyped launch of Tata Motors' Rs 1 lakh car.

Bajaj Auto, the country's second biggest two-wheeler maker, said it plans to bring out its small car in collaboration with Renault and Nissan within four years but it will not be for Rs 1 lakh (Rs 100,000).

"I know Carlos Ghosn (President and CEO of Renault and Nissan) has set a target of 2010 for Bajaj-Renault car. While it is hard to put any time-frame, we can say in two-four years we can expect to have the product ready," Bajaj Auto managing director Rajiv Bajaj told reporters in New Delhi.

Bajaj declined to give a specific price of the small car. Ghosn has earlier stated that Renault was looking for a $3,000 car in India, a move triggered by Tata Motors' Rs 1 lakh car that will be unveiled later this week.

Other Cheap cars - Chery QQ

Chery QQ : which sells in China for about $3,900. It's apparently a copy of the GM-Daewoo Spark, introduced in China in 2003. The car is at the center of an industrial rights controversy, since GM have claimed that it is very similar to the Chevrolet Spark/Daewoo Matiz. GM executives have proved that the doors of the Chery car can be mounted on the Chevrolet Spark without modification, and Car and Driver, an automobile magazine, even calls it "a copy".