Abstract

The case discusses the making of Tata Nano, the world’s cheapest car, manufactured by India based Tata Motors. On March 30, 2009, Tata Nano was launched with an ex-factory price tag of INR 100,000 (about US$ 2000). The case explains the design and development process of Tata Nano. The car was the result of a five year research and development project carried out by Tata Nano development team. While developing the car, Tata Motors and its suppliers constantly made efforts to reduce the costs while ensuring quality of each and every component including engine, steering, wheels, tires, windshield washing system, gear shifter etc. Analysts opined that Tata Nano had created a new segment in the passenger car market. However, they were concerned about the company’s lack of capacity to fulfill high demand. They also argued that considering the low margins the company would get, it would take a long time for the project to break even. The case ends with a discussion on the challenges Tata Nano might face in the future.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the challenges in developing an innovative, cost-effective product. Study the Tata Nano project with a focus on design and development process of the car. Understand the efforts put in by Tata Motors to cut down the costs at every stage of deve

Keywords

Tata Motors Ltd., Tata Nano, Small Car, World's Cheapest Car, Value-for-Money Car, Costs, Product Design, Product Development, Ratan Tata, Automobile Safety Standards, Engine Induction System, Maruti 800, Dealers' Margin, Creating New Markets, Business Model, Fuel Economy, Price Leadership, Cannibalization of Sales