Tata May Allow Other Nano Manufacturers

Tata plans to also allow “private-label” versions of the Nano

By Brendan Moore

11.09.2009

2010 Tata Nano orangeIn an unusual statement last week, Tata Motors Ltd. executives said that they may allow “micro” car assemblers in India to assemble the Nano from “knock-down” kits and sell the car with their proprietary brand. In other words, Tata would basically be a private-label supplier to anyone that wanted to make their own branded version of the Nano.

India’s Business Standard quoted Vice Chairman Ravi Kant at an awards ceremony last week as saying Tata might allow external assembly shops all across India to put together the Nano, and those small companies would have the option of calling their finished product the Nano. Or, says Kant, they could call it something else, as it would be up to them.

Tata believes another 10,000 units of annual Nano production could be achieved this way. Demand for the (approximately $2100 USD) Nano is far outstripping supply in India currently. Tata has a new plant coming online in March, 2010 with an annual production capacity of 250,000 units, but that is not expected to be adequate to meet demand, either.

The obvious questions present themselves immediately, however. If the car produced by a car assembler external to Tata were to be sold as a Nano, would it it have meet some uniformity standards in quality and appearance? Would it be eligible for the factory warranty?

If the manufacturer made enough modifications (interior, body panels, etc.) to the Nano, would Tata then not allow them to use the Nano name?

There are a great many “what if” scenarios that present themselves within the scope of what Tata has suggested, but, still, it’s an interesting idea. If an enterprising business wanted to get into the auto industry, this would be a great way to do it. The company could start by meeting demand for the stock Nano, and then branch off into some derivative of the standard model that would find favor among buyers that wanted something a little different.

Think about these examples.

A Toyota Matrix is just a re-bodied Toyota Corolla. A VW Karmann Ghia was just a re-bodied VW Beetle with a slightly upmarket interior. I could go on, but I won’t.

Suffice it to say that the move by Tata to offer to be a supplier to any company that wants to build their own car off the Nano platform is a great opportunity for someone to be a niche manufacturer on the cheap in India.

It will be very interesting to see how this pans out in India. Intuitively, you have to believe that the first companies that take Tata up on it’s offer will be producing Nanos that look just like the factory Nanos, because that’s where the obvious demand is at the moment. But how long can it be before one of the micro-assemblers thinks he has a better idea?

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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5 Comments

  1. Interesting.

    Imagine if other manufacturers did that. It would be sort of the “open source” version of automotive production, which might have some benefits.

  2. Stephane:

    This is a little different than licensing out the design to another manufacturer like the arrangements you describe.

    Tata is going to send these kits to little shops who will bolt them together to make a car that can be called a Nano. It’s kind of like having your uncle and your dad order 10 of them and put them together and then sell the vehicles out of the front court.

    And, the topper is that Tata doesn’t mind if you decide to call it something else instead of Nano.

    It’s all a bit free and easy, innit?

  3. It’s kind of weird, it’s like getting a Nano franchise. Instead of making sandwiches, though, you make some cars.

  4. Lane:

    It is a very interesting concept in the open source regard. Some very creative derivative cars could be created from the base technology platform.

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