Wednesday, January 23, 2013
The Nano Effect on Urban India
While Ratan Tata has made great inroads in marketing and distributing the Nano to markets in India, he has also created a panic amongst urban planners of India’s largest metropolises. While the 1 lakh (2,000$) basic nano has put car ownership within reach to millions of Indians with the ‘aspiring middle class dream’, it does mean that Indian cities are capable of handling the millions of projected small automobiles planning to replace 2-wheelers on Indian streets[i].
Ratan Tata’s innovative Open-Distribution supply chain which involves distributing assembly kits to regional entrepreneurs has leveraged existing manufacturing and sales infrastructure to help mobilize and develop sales networks throughout India[ii]. Tata now needs to focus on the clear cut issues in Indian urban infrastructure including the ceaseless gridlock plaguing major Indian cities. Many roads in India are not even wide enough to support two directions of traffic much less the drastic influx of new cheap cars from Tata and its competitors Renault-Nissan, Toyota, Hyundai and Maruthi.
Urban planners are also sending a clear message by supporting large scale mass transit infrastructure projects such as the Bus Rapid Transit System in Hyderbad and the Namma Metro System in Bangalore[iii]. Tata needs to pursue not only innovating his own supply chain infrastructure but the public transportation infrastructure in order to maintain sales. Improving car-centric infrastructure reduces the barrier to entry to car ownership and will help Tata drive sales. It has also been demonstrated to drastic improve economic growth[iv]. Currently with sales higher than expected Tata is focusing primarily on ‘refreshing’ the nano to realize its full potential by expanding his dealership network to continue to leverage local entrepreneurs[v].
Question: How can Ratan Tata leverage his prominent position in India to improve car-centric infrastructure in order to reduce the barrier to entry for car ownership amongst middle class Indians in Urban and Rural Environments?
[i] Avinash Rajagopal. The Nano Effect of Urban India. Change Observer. Design and Social Innovation. The Design Observer Group. February 23rd 2010. http://changeobserver.designobserver.com/feature/the-nano-effect-on-urban-india/12818/
[ii] John Hagel and John Sealy Brown, Learning from Tata’s Nano. Innovation on the Edge. Bloomberg Busienssweek. February 27th 2008. http://www.businessweek.com/print/innovate/content/feb2008/id20080227_377233.htm
[iii] Avinash Rajagopal. The Nano Effect of Urban India. Change Observer. Design and Social Innovation. The Design Observer Group. February 23rd 2010. http://changeobserver.designobserver.com/feature/the-nano-effect-on-urban-india/12818/
[iv] Sam Pollock and Kim Redding. Why Infrastructure. The Global Infrastructure Investment Thesis. Brookfield Asset Management. http://www.brookfieldinfrastructure.com/_Global/22/img/content/file/Why%20Infrastructure-Jan2009.pdf
[v] Nano being ‘refreshed’ to realize full potential: Ratan Tata. The Times of India. December 16th 2012. http://articles.timesofindia.indiatimes.com/2012-12-16/india-business/35850136_1_tata-nano-nano-sales-cheapest-car