Tata Nano

In the past week alone, domestic rival Bajaj Auto unveiled a hastily configured concept car with a price tag of $2,700, and Osamu Suzuki, chairman of Japan's Suzuki Motor (7269.T), said the $2,500 price point was not where the market is (BusinessWeek.com, 12/5/07) in India. International carmakers and media doubted Tata's ability to meet international environment and safety standards, and wondered aloud what the appearance of an affordable car would do to India's already congested roads.

Throughout, Ratan Tata remained unfazed, despite his own doubts of meeting his timeline and price goal at a time when the costs of raw materials, from steel to rubber, were rising. But Tata promised a $2,500 car, and "a promise is a promise," he said to an audience spilling out into the streets and packed with government officials, industry chiefs, international carmakers, and reporters. "I hope it will be seen as the car…which changes the manner in which people in rural and semi-urban India will travel," said Tata. And, he added, "it will be a profitable venture for the company."

The Nano has broken ground on many different levelsвЂ"in price, in size, in distribution, and technology. By using lighter steel, a smaller engine, and having longer-term sourcing agreements with parts suppliers, Tata was able to keep the price of the Nano down. Its length of 3.1 meters, width of 1.5 meters, and height of 1.6 meters, with wheels at the outer corners and engine, gears, and transmission in the rear, creates space inside the car.