Tata Nano: Little car, Big ambitions

Tata Nano: With a starting price of $2,900 it's the world's cheapest auto. By Alex Taylor III, senior editor at large


FORTUNE -- Nothing better demonstrates Ratan Tata's vision for his company than his ambition to build a modern-day Model T -- a people's car -- that would lift India out of motorbikes and auto rickshaws into the 21st century of motoring. The 2011 Nano, with a starting price of $2,900, has the capability of delivering on his vision. But the Nano has struggled with the complexities of life in India.

Tata (TTM) first planned to make the car at a plant in West Bengal. Farmers protested, and Tata decided to move. The state of Gujarat in West India offered Tata a factory site in Sanand, where residents also protested. After a favorable court ruling, Tata started construction anyway.

In July 2009, Tata started delivering the car, and within a year sales reached 9,000 a month. Then they started falling, reaching a low of 509 last November. "We didn't do enough to market the car," admits Tata.

Tata responded by hiring more salespeople at dealerships, working with banks to help buyers take out loans, and more than doubling Nano's warranty to four years or 36,000 miles. After several cars caught fire, it decided to beef up the exhaust system with a heat shield and add a fuse to the electrical system. Sales to dealers began recovering and reached 8,707 in March.

Tata's engineers showed me some of their cost-saving tricks. They used three lug nuts instead of four to hold each wheel to its axle. Components multitask, so the horizontal brace holding the front seats to the floor also serves as side-impact protection. There is no radio and no airbags, and only one windshield wiper. Air conditioning is an option. Where packaging and convenience conflict, packaging wins. The tiny engine is stowed beneath the back seat and is accessible only after six wing nuts are unscrewed.

I drove the Nano on the short test track at Pune. The Nano weighs just 1,320 pounds, about half as much as a compact car, but the two--cylinder, 35-horsepower engine is overmatched; acceleration with a full load can best be described as "leisurely." That's not a problem in Mumbai's congested streets, but it's potentially suicidal on a modern expressway. Still, the Nano ran, steered, cornered, and stopped without much fuss, and its mileage is rated at 50 per gallon.

Tata has his eye on the U.S. market for "a more potent vehicle" that could sell for $7,000 to $8,000 with a bigger engine, a wider stance, and better crash protection. "If you have a vision, you can come pretty close to doing it, even if everybody tells you it can't be done," he told me. Despite its troubled birth, the Nano is evidence that he can deliver on his promises. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.36%4.24%
15 yr fixed3.39%3.26%
5/1 ARM3.36%3.27%
30 yr refi4.34%4.22%
15 yr refi3.38%3.24%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Company Price Change % Change
Bank of America Corp... 16.15 0.00 0.00%
Facebook Inc 58.94 0.00 0.00%
General Electric Co 26.56 0.00 0.00%
Cisco Systems Inc 23.21 0.00 0.00%
Micron Technology In... 23.91 0.00 0.00%
Data as of Apr 17
Index Last Change % Change
Dow 16,408.54 -16.31 -0.10%
Nasdaq 4,095.52 9.29 0.23%
S&P 500 1,864.85 2.54 0.14%
Treasuries 2.72 0.08 3.19%
Data as of 12:12pm ET
Sponsors

Sections

Spencer has been a supporting member of the "Good Morning America" cast for the past three years. More

Obamacare sign ups hit 8 million, though final enrollment remains to be seen. More

Office for iPad move is a symbolic victory for Nadella's Microsoft, but the company is still weighed down by many of the same old issues. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

As Detroit moves closer to reaching a bankruptcy deal, retired civilian workers are poised to be left worse off than firemen and police officers. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.