Until about two years ago, India was no different from other less developed countries in one crucial aspect: it had not designed and produced a car indigenously. India’s case was even curiouser: the country had sent missiles into space but had not been able to produce an indigenous car.
That situation changed with the launch of the Tata Indica in December 1998. How did Tata Engineering achieve this feat? Ratan Tata, executive chairman of Tata Engineering, shared his experience of creating the Indica with a select audience in New Delhi recently.
Mr Tata was speaking for an ongoing lecture series on "The Ideas That Have Worked". The lecture series, in which Mr Tata was the ninth speaker, is organised by the Ministry of Administrative Reforms, along with the Civil Services Officers Institute and the Andhra Pradesh Civil Services Association. Invited by Arun Shourie, minister for administrative reforms, to speak, Mr Tata chose to speak on 'The Indian Car'.
His half-hour talk was interspersed with a display of slides and videos on the screen.
The story began, said Mr Tata, in 1993, when, speaking at the annual convention of the Automotive Component Manufacturers’ Association (ACMA), he put forth the idea of an Asian car to be produced as a collaborative effort by the Indian automobile industry. The response of the industry, Mr Tata recalled, was a mix of skepticism and cynicism.
Tata Engineering then decided it would attempt to produce the car on its own. In taking this decision, it was emboldened by two factors:
The basic concepts of the car were set out in 1995. The car should, it was decided, be designed around the specific needs of the Indian car owner and would have:
With these as the specs, the company's designers at its Engineering Research Centre (ERC) created some renderings (see illustrations alongside) of the car which were refined and finalised in association with the famous Milan-based design house, IDEA.
With the aid of a brief video clip, Mr Tata gave a glimpse of the facilities at the ERC. For the Indica, said Mr Tata, ERC’s designers and engineers had done their work entirely using computer aided design (CAD) stations and computer-aided manufacturing (CAM). Tata Engineering has invested over Rs120 crore on 225 CAD stations for its 340-odd engineers to work on.
Computer aided designs of the Indica
Mr Tata then shared the details of the project to give some idea of its magnitude:
Compared to the $400 million that Tata Engineering spent on creating the Indica, Mr Tata said, the creation of a new car in the West typically entails an investment of well over $1.5- $2 billion in creating the production facilities, with development and tooling costing in the region of $800 million more.
One reason why Tata Engineering could achieve the same feat (of building a full new car project) at a fraction of global costs was that it picked up an unwanted Nissan plant, not being used by its unit in Australia, for a bargain basement price of Rs103 crore. Though not being used, the plant was in prime condition, since Nissan was taking care to run it for 15 minutes every day.
Buying the plant was, however, the easy part. The difficult part was transporting and reinstalling it: something Tata Engineering decided to do itself. The task involved moving 4,800 tonnes in 582 containers in 16 shipments over six months.
However, as Mr Tata told the audience, the Nissan plant was only a small part of the full plant created to produce the Indica. At this point, he showed the audience a six-minute video film of the plant at Pune, offering a glimpse of how the Indica is actually made. The video showed, in some detail, the work done in the five shops that create the Indica: the engine shop, the transmission shop, the press and welding shop, the paint shop and the assembly shop.
Mr Tata then showed the audience — through computer-simulated moving images and videos — a glimpse of some facilities created by Tata Engineering, which are unique among Indian automobile manufacturers.These include the crash test and the Anechoic Chamber (for testing the sound level of the engine).
The other initiative that Tata Engineering took was to involve its vendors in the development of the car in a major way — right from the concept stage. Eventually, over 300 vendors supplied some 1,360 parts of the Indica to Tata Engineering, comprising 77 per cent of the vehicle's cost. In doing all this, Mr Tata told the audience, the vendors have created some 12,000 jobs.
Moving on to the events leading up to delivering the Indica to the market, Mr Tata showed video clips to give the audience a glimpse of the unveiling of the Indica at the January 1998 Auto Expo, its display at the Geneva Motor Show in March 1998 — the first time an Indian car was displayed at the world’s premier motor show — and the December l998 launch in Mumbai. Click here to see the project schedule
The Indica has now been on the Indian roads for the last 20 months. How has it done? According to the latest figures available, Tata Engineering has sold nearly 82,000 Indicas, and has captured a market share of 14.4 per cent in its segment. For its passenger cars, Tata Engineering decided to create a separate Strategic Business Unit (SBU) with its own sales and marketing set-up. Currently, the Indica is sold and serviced at over 70 dealers and 164 authorised service centres.
As far as the Indica is concerned, Mr Tata said, Tata Engineering's next challenges are: one, to begin exports — with a batch of 200 on its way to Italy as a "seeding" operation; two, to tackle quality-related issues, and, three, to speedily come out with variants.
What are Tata Engineering's challenges as a passenger car manufacturer? It has always been clear to the company, Mr Tata said, that it cannot be a one-car manufacturer if it wants to be a serious player in the passenger car market. It must, therefore, produce variants and other models.
But can Tata Engineering compete with global majors? This is what the company is asking itself. Almost all global majors, Mr Tata reminded the audience, are present in the Indian market: General Motors (Opel-Astra), Ford (Escort, Ikon), Hyundai (Accent, Santro), Daewoo (Cielo, Matiz), Fiat (Uno, Sienna), DaimlerChrysler (Mercedes), Suzuki (Maruti 800, Zen, Esteem, Baleno and Alto) and Mitsubishi (Lancer). All these car makers have introduced products in the Indian market that they have developed abroad. Moreover, Mr Tata pointed out, these manufacturers have already been through the learning curve that Tata Engineering is currently going through.
Further, once the Indian auto market opens up fully, as it will once WTO norms are fully adopted by India, these global majors will be able to serve the Indian market from abroad. These manufacturers, and others like Toyota and Volkswagen, can introduce models and face-lifts with a frequency that will be difficult for us to match. Thus, said Mr Tata, it has become essential for Tata Engineering to seek alliances with leading car manufacturers.
Tata Engineering, as indeed the Indian automobile industry, has one other mountain to climb, said Mr Tata: build the elusive "people’s car", a car that will cost less than Rs1 lakh and offer an option to two-wheeler owners to move to a four-wheel transport.
Can such a car be created by using scooter parts? That’s the challenge the Indian automobile industry needs to explore. If this were possible, Mr Tata said, doing some loud thinking, the creation of the components for such a people’s car could be farmed out to a host of manufacturers, creating thousands of jobs.
Tata Engineering itself, said Mr Tata, had displayed a concept car, the Zing, at the 1998 Auto Expo, which falls within these parameters.
Creating such a car would be a "global first" for the Indian automobile industry, Mr Tata noted. Can we do it? Mr Tata ended his talk by asserting that India needs to believe in itself, in its abilities, in its courage and in its people, particularly its youth.
Together, he concluded, "We can make things happen; we just need to do it." Like Tata Engineering did, with the Indica.