Why Indica and Nano will remain biggest feathers in Ratan Tata’s hat

The ordinary way to make a car or a bar of soap, or anything else, is to ask: how much can I squeeze the buyer for this? Carmakers add pointless features (we are looking at you, sunroof) which do not cost them much, and jack up their margins. Very rarely, a car is built with a different thought: the buyer can pay only this much, how much can I give them in return? Such cars, be it Ford’s Model T or VW’s Beetle, Citroen’s 2CV or BMC’s Mini, go down in history as “people’s cars”. India had that moment once with the Maruti 800 in 1983, but by the 1990s the philosophy behind people’s cars had become unfashionable across the globe. Nobody wanted to cater to the ‘bottom of the pyramid’. Until one man did, and he did it not once but twice in a decade with the Indica and the Nano. That man, as everybody knows, was the late Ratan Tata, and reams have been written about him since his passing on October 9. But the Indica and the Nano, which are strongly linked with him in public memory, deserve some space too.Teaching an elephant to dance At the Nano’s launch during the 2008 Auto Expo, the then 70-something Ratan Tata admitted on stage: “This has been referred to as one man’s dream, and indeed it was…” It was an uncharacteristic remark from the famously self-effacing businessman. medium114184545 Before the Indica’s launch in 1998, he had told Time magazine his emotional investment in the project was “only to the extent of being a chief executive and directing it… My involvement has been there with all Telco’s (Tata Motors’ old name) projects — somehow the car has got hyped up.” It was an understatement, of course, because Ratan Tata had done more to transform Telco from a truck manufacturer to a carmaker than anyone else. In Sucheta Dalal and Debashis Basu’s book Pathbreakers 2, Tata recounted how Telco chief Sumant Moolgaokar had been keen on entering the car business but the “two or three proposals” the company sent to the government “were all rejected, because of vested interests from the existing car players”. Nonetheless, when Tata rejoined Telco in 1986, his team started work on a small car. Former Hyundai India head and one-time Telco employee BVR Subbu writes in his book Santro: The Car That Built a Company, that they bought two Honda Acty pickup trucks at an auction, along with the “steering, suspension and brake components of the Maruti 800, used drawings of the overall dimensions of the Honda City out of Britain’s Autocar magazine” and built a test car. While the ‘car’ didn’t impress Moolgaokar, it was a useful lesson that emboldened the team to launch the 206 pickup, better known as the Tatamobile, in 1988. The 206 flopped because nobody wanted a pickup at that time. So, Telco launched the Tata Estate ‘luxury’ car on the same frame, followed by the Sierra SUV, inspired by the Chevrolet Blazer. Made in small volumes, they were India’s first indigenous cars. “These were all bridge vehicles: rough and tough, not so well finished,” Tata told Time in the 1998 interview. “We were making the transition to a manufacturer with a full range of vehicles, but we were making it inadequately. Our mindset was still the same as when we made vehicles for (truck) operators and not for car owners.” But their next attempt in 1994 — the Tata Sumo multi-utility vehicle — was a roaring success. Subbu says it took 50% market share against Mahindra and Mahindra within a year, and then set the record for the fastest sales to 100,000. The truck maker had shown it could make cars. The elephant had learnt to dance. The time had arrived for Ratan Tata to implement his vision for a people’s car.800 in his sightsThe Indica and the Nano were launched 10 years apart, but it’s interesting that Tata benchmarked both against the original people’s car, Maruti 800. About the Indica, which was substantially bigger, heavier and more powerful than the 800, he told Time: “Pricing will be key. We have worked to the objective of having it around the Maruti-Suzuki 800. We shouldn’t end up being substantially higher.”Watch: How Jay Leno got his Tata Nano in Los Angeles medium nocaptionhttps://www.youtube.com/watch?v=NGEwG62Q1UQ Many foreign cars had entered India in the mid-to-late-1990s. Some, like the Daewoo Cielo and the Opel Astra had become household names, others like the Honda City and the Ford Ikon were on the verge of doing so, and still others like the Peugeot 309 and the Ford Escort had languished despite a stellar image abroad. Among hatchbacks, the Fiat Uno had tried to loosen Maruti’s grip but failed. It had actually notched up 290,000 bookings and then kept buyers waiting. However, Daewoo’s Matiz and Hyundai’s Santro looked like serious competition. And that’s when Telco entered the fray with its Indica. Was it late? Maybe, but Telco had been late in the light commercial vehicle (LCV) game also. It had launched the Tata 407 light truck after Allwyn-Nissan, DCM-Toyota, Eicher-Mitsubishi and Swaraj-Mazda, and won. But that was the truck business. The Indica was a car. And unlike the Estate, Sierra and Sumo, it was not a body bolted onto a frame like a bus. Instead, it was Tata’s first modern ‘monocoque’ car. The company’s future as a carmaker depended on it. It was a gamble, but Ratan Tata told Time he had carefully thought it through. “We have hedged the car gamble to the best extent that we can,” he said. “In the worst possible case, even if the car initiative were to bomb, an investment of some $400 million will not gamble away the company.” Tata had hoped to sell 150,000-200,000 cars every year, but he was prepared for a 50,000 annual sales scenario: “If the average realisation per car is even as little as $600-$800, we make money.” Besides, he said, “What we are getting for our investment is a plant that will produce cars, not just this car. Most of the jigs and fixtures that are there are not specific to the small car. I see the project not so much as a gamble as an investment in building the infrastructure of Telco.”Mover and shaker The Indica did not succeed the way Ratan Tata had hoped it would. This was partly because it arrived at an inopportune time when the Indian economy’s growth had slowed to 6% and the car market had stagnated at 400,000 units per year, of which Maruti alone held 82%. The story started well for the Indica with 125,000 buyers paying the full price in advance. If Tata’s dream was to make cars more accessible, the Indica’s aggressive launch price achieved that by spooking Maruti into making the 800 cheaper. On December 30, 1998, the Indica was launched at Rs 259,000 for the petrol version and Rs 295,000 for the diesel in Delhi. The Times of India of December 31 reported that Maruti had reduced the price of 800’s base model by Rs 24,000 to Rs 185,000 in Delhi, and Rs 201,000 in Mumbai. medium nocaption114186363However, problems with the Indica’s first version dented its image and Telco had to quickly make changes to relaunch the car as the Indica V2, which sold well. Sedan (Indigo) and estate (Indigo Marina) versions followed, and Ratan Tata’s first people’s car left its mark on Indian automotive history. It didn’t beat the 800, but forced its rivals to take their customers more seriously. Smaller, bolder second chapterTata wasn’t done yet. With the Indica he had tried to make a bigger and better car for buyers on a budget. His next goal was to make a car for people whose budget was limited to a motorbike. It had started with concern for whole families riding a scooter: man driving with a child in front, and wife riding pillion with an infant in her arms. Tata said he had wanted to make bikes safer somehow, but the Automotive Component Manufacturers’ Association (ACMA) was not interested. “I began to think along the lines of a small car,” he told Outlook Business shortly after launching the Nano at the promised price of Rs 100,000 on January 10, 2008. Tata Motors’ share price slipped 2.8% that day as analysts said the car would make only Rs 4,000 per unit. Bigger problems lay ahead that would eventually scar the little car for life. But on January 10, the public in Pragati Maidan’s Hall No. 11, and outside, couldn’t have enough of the Nano. Outlook Business surveyed 516 two-wheeler owners soon after the launch and found that 93% liked the Nano, 76% wanted to buy it, and 71% were happy with the promised fuel economy of 21kmpl. Almost 90% said they would take the Nano over a bigger second hand car. But the most telling remark was that 56% wanted the Deluxe AC variant, not the base car with a showroom price of Rs 100,000. Somehow, in trying to fulfill buyers’ functional requirements, Tata had not taken into account their aspirations. That, by most accounts, proved to be the Nano’s undoing. The tag of “India’s cheapest car” became a stigma. So, prospective buyers didn’t want to be seen in it. Where Tata had hoped to sell a million Nanos every year, only 130,000 were sold between July 2009 and October 2011. Eventually, only 800,000 cars were made. Tata Motors stopped general production of the Nano in 2016 and instructed dealers to not accept orders in the second half of 2017. In June 2017, 275 Nanos were made and 167 sold. A year later, only three were made and one sold. medium114186075Engineering marvel nonetheless Despite the heartbreak, the Nano will count among the most significant cars of the 20th century because it showed what was possible with creative engineering. At the car’s launch, Time magazine’s Simon Robinson wrote, “It could well be one of the most important cars ever designed.” He pointed out that the Nano’s sub-$2,500 launch price was almost the same as the Honda Civic’s price in the 1970s. The Civic had been a much smaller car at the time, and adjusted for inflation, it would have been worth $10,500 in 2008. Tata’s team of 500 engineers had achieved this through unorthodox methods. They had used super glue where welding wasn’t absolutely necessary, one windshield wiper and rear view mirror, smaller tyres without tubes, three lug nuts on each wheel instead of four… and a rear engine, like the VW Beetle. medium nocaption114186380The Nano was also very well packaged. It was marginally smaller than the 800 in length but wider and taller, having about 20% more room inside. As motoring journalist Adil Jal Darukhanawala pointed out: the Nano was a car, not an apology. But a string of fires in the initial days, delayed deliveries due to the Singur factory relocation, and the high on-road price of the Deluxe variant that put the Nano in the 800’s territory, changed the public’s mood. When prospective buyers, wary of its “cheapest car” tag, asked, “What will people say?” the Nano had no answer.