Ratan Tata: The $2,200 “People’s Car”

Tata speaks about the Indian group’s international strategy, his plan to create a $2,200 “people’s car,” his vision of India as a knowledge center for the world, and his dedication to the social responsibilities required from companies operating in developing markets.
On the car:
“Today we’re producing a $7,000 car, the Indica. Here we’re talking about a $2,200 car, which will be smaller and will be produced in larger volumes, with all the high-volume parts manufactured in one plant. We’re also looking at more use of plastics on the body and at a very low-cost assembly operation, with some use of modern-day adhesives instead of welding. But the car is in every way a car, with an engine, a suspension, and a steering system designed for its size. We will meet all the emissions requirements. We now have some issues concerning safety, mainly because of the car’s modest size, but we will resolve them before the car reaches the market, in about three years’ time.
“In addition—and this again touches on the social dimension—we’re looking at small satellite units, with very low breakeven points, where some of the cars could be assembled, sold, and serviced. We would encourage local entrepreneurs to invest in these units, and we would train these entrepreneurs to assemble the fully knocked-down or semi-knocked-down components that we would send to them, and they would also sell the assembled vehicles and arrange for their servicing. This approach would replace the dealer, and therefore the dealer’s margin, with an assembly-cum-retail operation that would be combined with very low-cost service facilities.
On India:
“If we play our cards right as a country, we could be a supplier of IT services and IT solutions to the world. We could also be a product-development center for pharmaceuticals. We could be a very good global R&D center in biotechnology and in some of the emerging technologies, such as nanotechnology, provided we really give them the focus they would need.
On bringing talent back to India:
“Indians coming back to India really go through a cultural shock. They give up a lot in terms of the quality of life, the education of their children, the availability of medical facilities. This will also have an impact when we want to hire people who are not Indians, as we will have to do in a world without boundaries. Even if we start only with pockets of the country and make those pockets less of a cultural shock, the benefits will spread. In some ways, this is what China did with the economic zones.
On values:
“What I feel most proud of is that we have been able to grow without compromising any of the values or ethical standards that we consider important. And I am not harping on this hypocritically. It was a major decision to uphold these values and ethics in an environment that is deteriorating around you. If we had compromised them, we could have done much better, grown much faster, and perhaps been regarded as much more successful in the pure business sense. But we would have lost the one differentiation that this group has against others in the country. We would have been just another venal business house.
“I think it is wrong for a company in India to operate in exactly the same way, without any additional responsibilities, as if it were operating in the United States, let’s say. And even in the United States, I think if you had an enlightened corporation that went into the Deep South, you would see more of a sense of social responsibility, of doing more for the community, than the company might accept in New York City or Boston. Because it is inevitable that you need to be a good corporate citizen in that kind of environment. And companies that are not good corporate citizens—those that don’t hold to standards and that allow the environment and the community to suffer—are really criminals in today’s world.”
Read the McKinsey Quarterly article >>

2 Replies to “Ratan Tata: The $2,200 “People’s Car””

  1. sir,
    as i have purchased the tata indigo from automobile sterling d-4 sector -8 noida district ,gautam budh nagar (uttarpradesh) on the date 18-01-2006 and on the next day i register a problem of leakage of diseal from diseal pipe.
    sir is the way the product supplied by tata to customers
    or saying that its the dealer fault that without cheaking the car how they can supplied it to the customer .
    today 2-02-2006 the problem is still running .in this the tata image is going down in our mind and i myself advocate bhavuk khanna recognise my friends not to purchased tata indigo.
    sir i think you will take some positive action against my complaned so that the tata image and his dealer image improve in our mind.
    thank you
    bhavuk khanna
    opposite head post office bijnor u.p
    mobile -09412215586

  2. I don’t know why Tata is so popular!! What I feel is totally different story.
    I have Purchased TATA Indigo. As a mechanical Engineer I realised that TATA invests very very low on Testing as well as Research and Development. My car Model is TATA Indigo LS TDI . After purchasing car within next 15 days the car started problem of Smoking. After visiting many times to authorised service station of TATA the mechanics there are saying that Telco Has not given the training to solve this problem. And as this is the latest engine even we don’t know what is the problem…..
    I hope TATA will not bring the new $2,200 car like the TATA Indigo. We can not believe on TATA… I will suggest to everyone who is buying the TATA car that Please..Please… Don’t go for any TATA car…Otherwise you would have to “Spoil Yourself with Problems”….

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