No other car launch in the history of Indian auto industry has received as much global press as the "people's car", the Tata Nano. For good reason. A report from Business Today

No other promised to revolutionise motoring car as the Nano has. Clever marketing apart, some frugal and out-of-the-box engineering has gone into the making of Nano. BT's Krishna Gopalan and Kushan Mitra met the Nano's design team at the Engineering Research Centre in Pune to put together this report.

It's not yet a week since Ratan Tata unveiled his dream car at the Auto Expo in Delhi to unprecedented global media, well, hysteria, but at Tata Motors' sprawling plant in Pimpri near Pune, it's business as usual. There are no 'we've-done-it' banners festooned inside or outside the plant, no puffed-up chests striding around the facility, or even smug grin on anyone's face. At the south-western corner of the 160-acre facility, home to the Engineering Research Centre, where a young chief engineer and his team of 500-odd engineers have slogged over the last four years, putting in 12-14 hours a day, six days a week, there's even less of back-patting. Instead, Girish A. Wagh, barely 37 years old, is thinking five years ahead - he's already got some designs ready for the small car, Nano, variants that Tata Motors could offer in the years ahead.

Typical engineers? You could say so. But what's atypical about Wagh and his team is their handiwork. They've just created automotive history, that too out of one of the most unlikely places on earth. They've taken their Chairman Ratan Tata's dream - much like what Henry Ford had in the beginning of the 20th century in the US-of offering Indians ultra low-cost cars and turned it into a reality. The "people's car" unveiled on January 10 at the Auto Expo was stunningly good looking for the price tag it sports: a bare Rs 1 lakh, or $2,500, for the base model. The feat has so shaken the automotive world-from Detroit to Stuttgart to Nagoya-that Tata Motors' rivals, who never really considered it as a serious threat in passenger cars, are scurrying back to their own drawing boards.

That's hardly surprising. At Rs 1-lakh, the Nano is the world's cheapest car and holds out the same promise as Ford's Model-T did when it was launched in 1908 at a price of $825, and which is to make motoring affordable to millions of Indians when it hits the road in September or October this year. Even its 'deluxe' model, featuring air-conditioning and power windows, won't cost more than Rs 1.2 lakh on road-a good Rs 80, 000 cheaper than the cheapest car currently in the country, the Maruti 800.

A breakthrough car

So, how did a company best known for its lumbering trucks (and much later, its sub-compact car, Indica) end up designing a "cute-as-a-bug" car that its rivals said could not be built to the target price of Rs 1 lakh? What sort of out-of-the-box thinking did the engineering team have to do? What were the rules of car making that they had to rewrite? Before we tell you that, here's a quick look at the team that built the Nano. The man in charge of the small car project is Girish A. Wagh, who was also very closely involved with the design of the Ace, a four-wheeler that serves as a load carrier. E. Balasubramoniam is the Head of Sourcing for the project. The graduate from IIT Madras is 45 years old and was earlier with Maruti Udyog (now Maruti Suzuki). Nikhil Jadhav, 29, is possibly the youngest member of the team. Jadhav, an alumnus of IIT Bombay, is the designer on the small car project. Abhay M. Deshpande is Tata Motors' Assistant General Manager-Vehicle Integration at the ERC. Deshpande, 44, is in charge of vehicle integration, vehicle performance and chassis design. Vendor development is what Rakesh Mital, 44, is in charge of. He was earlier with Yamaha Motors.

While the Nano's design has received rave reviews, the team had to go through several iterations before the style could be frozen. "The entire body was designed twice while the engine was designed thrice," points out Wagh. If that sounds surprising, the floor was designed 10 times and the seats too an equal number of times. Wagh recalls that the car's dashboard had two concepts running simultaneously. Both had detailed designs with respective cost estimates. The one that was eventually chosen was what the Nano team thought would look more attractive to the customer. "There were two concepts and we thought the second one added more utility. We went for it since it was also more contemporary" says Tata Technologies' Industrial Designer, Nikhil A. Jadhav. Some Tata group companies lent their resources for

the small car project and Tata Technologies was one of them.

The car had three concepts to begin with. "We picked the one that we thought looked the best, and from that we made a full-scale model," says Jadhav. In mid-2005, one model was completed, which then went through a stage of refinement. This was where the initial volume of the car was defined. "It was here where we got into details like lamps and doors. From that point onwards, we actually did another model, which was a second stage model. Eventually, a final refined model was done by design house, I.D.E.A., which was brought here." adds Jadhav. The style for the Nano was frozen in mid-2006-exactly a year after the first model was completed. Understandably, this stage was important since it had to be in line with the cost targets. From then, the story was about engineering development.

Engineering the Nano

According to Wagh, the prototypes were put in place with that design. Again, it was not as if the job was done. Tata Group and Tata Motors Chairman, Ratan Tata, felt that a slight change in the front part of the car was required. "Finally, we ended up increasing the length of the car by 100 mm," says Wagh. It is not as if there is no room for further change in styling or design. By Wagh's own admission, there will not be any change in the Nano's exterior although there could be a few changes in the interior of the car.

While the bit about design and styling took a while, the decision with respect to having a rear engine was less complicated. "We had decided on a rear engine four years ago. This was with the objective of getting the best, optimal layout," states the Jai Bolar, Senior Manager (Development), ERC. If there was one thing from which the focus could not be taken away, it was obviously cost. That was often easier said than done, since the rising input costs were beyond the company's control. "Rising input costs made our engineering targets difficult. For example, if steel prices went up, we had no choice but to reduce the amount of steel in the car," says Wagh. Again, it was important to look beyond costs as well. "The price of the car is what the customer pays in the beginning. Later on, what matters is the performance of the car," he adds.

Ideas for the Nano came from unexpected quarters and they were looked at closely before a decision was taken. For instance, in addition to the vendors, a small group of mechanics was part of the development phase. This was really a part of the serviceability and accessibility workshop. Wagh recalls that one of the suggestions was to have an additional opening on the rear floor which would provide access to the intake manifold and starter. "We were trying to avoid this for cost reasons but the mechanics were vehement," he says.

The importance of balancing design changes with their respective cost implications cannot be overstated. Every design, therefore, had to cater to three key requirements-cost, regulatory requirements and acceptable performance standards. As Wagh puts it, "We did not want to make something that was an embarrassment of a car." Clearly, while the cost was hugely critical, the company was unwilling to make any kind of compromise on other areas. Fuel economy, according to Narendra Kumar Jain, Deputy General Manager (Engines), ERC, is a major driver for selling a vehicle in India. "It was important, for instance, to ensure that the car could be manoeuvred in the city. If your car requires less parking, then the material required is also less," he adds.

Of course, there was the advantage of having learnt from the Indica and the Ace. Wagh, whose father was on the Indica R&D team, was very closely involved with the design of the Ace as well. "Clearly, the Nano was a tougher cost target. In a commercial vehicle, endurance is of prime importance. It is also important in the case of a car, but sometimes other aspects like touch and feel are more critical," he explains. Possibly, the biggest plus point through the launch of the Indica and the Ace is that the development process at Tata Motors has matured to a great extent.

Costs, outsourcing and beyond

According to Wagh, every component in the Nano has been studied from a functionality, cost and performance requirement. There was no other way to reduce costs. From an outsourcing perspective, the

company put in place an Early Vendor Integration Programme. "We had a lot of design inputs from vendors that either facilitated manufacturing or brought the cost down. This could be for lamps or seats, for example," says Balasubramoniam. Elaborating on the outsourcing for the lamp, he explains that the surface was provided. "It was within that surface where the lighting mechanism had to be made operational" explains Balasubramoniam.

The Nano is completely indigenised, save for the fact that it will be using Korean and Japanese steel from Posco and JFE to begin with, as Tata Steel's expansion at Jamshedpur is not yet complete. Importantly, over 85 per cent of the vehicle will come from outside vendors. Tier-I ancillary manufacturers, based in and around the small car plant at Singur will manufacture complete sub-assemblies. The logic for this, says Wagh, is to make manufacturing as simple as possible. Balasubramoniam, meanwhile, has thus been flying all over the country, not only to the three established 'auto' manufacturing belts in India - the National Capital Region (NCR), Pune, Aurangabad, Nashik and Chennai - but also to the upcoming small car plant in Singur to plan the layout of the vendor park. This is with the objective of ensuring that parts between vendors and the assembly line move smoothly and just in time.

Not surprisingly, the vendors have had it anything but easy as far as the small car project is concerned. There are those who thought that the pressures on costing were just not working to their advantage. "We felt that it was not feasible for us to compete for the basic model of the Nano because the costing was too tight," says Sanjay Labroo, Managing Director, Asahi India Glass, but adds that he did plan to bid for the 'Deluxe model'.

Those who are on the project think it is worth the effort. "This car is not over-engineered like, say, German cars are, this is a great example of frugal cost-effective and relevant engineering," says Surinder Kapur, Managing Director, Sona Group, which has made the steering column and the transmission. Lumax Industries too was heavily involved in the project. The company made and designed the head and tail light fixtures on the car. "The opportunity to work on this car also gave our engineers a chance to showcase their skills, because most other car products are designed abroad and we just have to manufacture components to a specific blueprint. In this project we designed light fixtures that meet all regulatory needs, fit the car and are low-cost", says Deepak Jain, Executive Chairman, Lumax Industries. The company got involved in the project at a very early stage and Jain thinks that was one major reason by which costs were reduced.

Keeping costs down was a major problem for vendors, and they found innovative ways around it. "A long-life bulb that might last 10 years adds a lot to the cost, so we fit a standard-life bulb that met regulatory and warranty issues but kept costs low," explains Jain. "When we figured out that the car would be rear-wheel drive, we knew that the steering column could be engineered differently since the front wheels would not hold the weight of the engine. So we kept the steering column hollow," says Kapur.

Tata Motors, for its part, looked at various ways to cut costs across the spectrum. "For instance, a normal wheel mounting has four pins while we have three. We have also reduced the thickness of the bumpers," explains Wagh. That is, of course, apart from the fact that the car has only one wiper instead of the more conventional two. Electronic sourcing has been another effort to cut costs. Wagh goes back to a time when Tata Motors was recovering from huge losses - that was in 2001 - when the company took a lot of initiatives to cut costs. "One of the ways we decided to do it was through e-sourcing. It was used extensively for the Ace and now for the Nano. It provides good benefits as long as product specifications are firm," he adds.

By Wagh's estimate, there has been a saving of around 10 per cent as far as the Indica and the Ace are concerned. The actual numbers for the Nano are still being worked out. As things stand, the standard version of the car - what is being referred to, as the Rs 1 lakh car in that sense - will not have an air-conditioner or power windows or a central locking system. That apart, it will not have body-coloured bumpers or fabric-trimmed seats. All these features are expected to be a part of the deluxe model.

According to Wagh, in any automotive development programme, the cost reduction continues not till just the time the car is launched but much beyond that. "Initially, we were looking at cost prevention, which

involved selecting a design concept with the least cost. Today, it is a clear cost-reduction effort," he says.

Safety issues

While there has been concern generally on the issue of safety, the small car team outlines the fact that the Nano caters to safety norms at two levels. "The Nano meets all regulations in the Indian market. The package protected car also meets all future regulations in Europe as well, which includes offset frontal and side impact," says Wagh. Environment has been another controversial area, though the company points out that all norms have been met. "Currently, the car meets Bharat III norms, which are applicable in 11 cities while it meets the Bharat Stage II norms in the rest of the country. We will meet the Bharat Stage IV and Euro IV requirements as well," says R. G. Rajhans, Project Manager (Body Systems), Tata Technologies.

For now, the focus is on getting the car on the road, which Wagh thinks should be possible during the second half of 2008-09 financial year, that is after September. It is expected that the plant in Singur will produce around 1,000 cars per day. There are a couple of other things too that are being looked at.

"There are alternate fuel technologies under development such as CNG and LPG", he says and he even hints that a future model "could have a diesel engine". If that is not enough, Wagh is also working on technologies that Ratan Tata mentioned in an interview to this publication that the car "in the future might well have continuously variable or automatic transmission." Wagh adds that the roadmap will be to have a second generation of the vehicle in the next 5-7 years.

The Nano story, it seems, has barely unfolded.

What are the innovations that have made the Tata Nano possible, from design to product finalisation?Initially I had conceived a car made by engineering plastics and new materials, and using new technology like aerospace adhesives instead of welding. However, plastics didn't lend themselves to the volumes we wanted because of the curing time required. Volumes mean the world in this context: if we produce this car and if it is for the wider base of the pyramid, we can't settle for small numbers because then the purpose is defeated.

When we were planning facilities for the car and working out a business plan, the business plan shown to me was looking at a figure of 200,000. I said 200,000 cars is crazy. If we can do this we should be looking at a million cars a year, and if we can't do a million then we shouldn't be doing this kind of car at all.

But such a figure (a million cars) has never been achieved in the country before. If it had to be done the conventional way, it would have meant investing many billions of dollars. So we looked at a new kind of distributed manufacturing, creating a low-cost, low break-even point manufacturing unit that we design and give to entrepreneurs who might like to establish a manufacturing facility. We looked at different ways of servicing the product, at the customer's location, and through a concept adopted from the insurance industry, wherein self-employed people are trained and certified by us. And we went back to innovation in design and scrupulously took, as much as we could, cost out of the product.

We did things like make similar handles and mechanisms for the left- and right-side doors; we developed our own small engine which could sit under the rear seat, enabling us to craft a smaller overall package; we looked at a new type of seats; and we worked at cutting costs everywhere. We have put our instrument cluster in the middle, not in front of the driver. This means the same dashboard will work for a left-hand-drive vehicle. There are a lot of such innovations that are low-cost and future-oriented.

Equally important to the cost structure was the incentive we could get from having our manufacturing facility at a particular place. The benefits on this count will be passed on to the customer.

Our move to West Bengal was a leap of faith and a sign of our confidence in the leadership in the state. We were breaking new ground, not only on the product front but also in helping industrialise a previously ignored part of India. But we did not start out getting the incentives that other states were offering. I remember telling the chief minister [Buddhadeb Bhattacharjee], "Sir, much as we have tried, it makes no sense for us to come to West Bengal. We cannot meet the cost requirements we have without incentives." It was then that we negotiated a set of incentives that, long-term, work out to be the same as we may have had if we set up in some other place.