The Hindu Business Line : ‘Nano is a watershed moment for the automobile industry in India’

Chennai, March 23 Dr V. Sumantran, formerly Executive Director (Passenger Car Business Unit and Engineering Research Centre), Tata Motors, was associated with the Nano project during its conception. Now Executive Vice-Chairman, Hinduja Automotive Ltd, Dr Sumantran says that the Nano project has endowed the automobile industry with greater legitimacy that it had before. Excerpts from an interview with Business Line:

What does the Nano mean for the auto industry?

It is definitely a watershed moment. From being a backwater of automobile engineering and production India has now acquired a prominence in product development and manufacturing. The Nano project has endowed the automobile industry with greater legitimacy that it had before.

How do you rate the chances of Nano’s success in the market?

The Nano will meet an important product need. There are three reasons why I feel it should do well. Affordability, its manoeuvrability in our crowded streets and third, as a society, we are amenable to live without certain amenities in a product. For instance, power windows, power steering, front disc brakes… if I’m going to be driving at no more than 50 km an hour on city roads, do I need a front disc brake?

In that sense, the Nano is well targeted but in this industry one has to wait and earn success. I would give it at least 5 years before passing a judgment. From hereon success will be a factor of execution capability and capitalising on the interest generated in the product.

What do you think of the criticism that the Nano will increase pollution and congestion on roads?

I think it is unfair. If one is entitled to own a big car then so is someone to a small car. From a societal point of view the question to be asked is not what the company is doing but how successful our country has been in facilitating mobility of its people. There are people who can afford more than a two-wheeler but not a car. We should not single out the Nano for criticism but help focus Government thinking on systematic transportation planning.

What were the challenges that you encountered in the initial stages of the Nano project?

There are two interesting anecdotes that sum up the challenge we were up against. We were working on the engine design and there was this German electronics and engine systems manufacturer eager to break into the market as an alternative to established players. It would send its best and established people for discussions. Once, we were discussing a rough cost boundary for the engine. Twenty minutes into the discussion, the German realised that while we were taking of a cost estimate for the whole engine he was interpreting it as the cost of just one part – the fuel injection system!

The measure of interest that the project generated was tremendous. GE’s Mr Jeffrey Immelt spent 30 minutes on a one-on-one discussion just to understand what was needed from GE Plastics. We were thinking of plastic body panels then and Mr Immelt volunteered his best resources which was the team that worked on a small car project for a German manufacturer. We told him that rather than such a team, we would receive far greater value from the team within GE’s global operations that was challenged most by any customer. Mr Immelt replied that perhaps the team that supported Canon witnessed the most acute challenges in terms of performance and cost. So we asked for the help of that team.

What do you think was the reason for this big response from global players?

Three reasons. First, they judged rightly that the scale of the enterprise was much larger than they had ever seen in India. Second, the technological challenge in helping shave off even 10 cents from the price of the product. In F1 design, which is at the cutting edge, there is a big celebration when even 10 gm of weight is shaved off the car. The Nano and its cost are similar. Third, they realised that if they learnt how to crack the problem then it could be applied in other fields.

Do you feel that the Nano will be a “stimulus” for the car market now?

The Nano is sure to bring in a lot of buyers, especially those with unusual buying habits but whether this will be of a magnitude to contribute to recovery, I don’t know.

In the current global environment, could the Nano herald a shift to similar vehicles?

Well, the economic downturn and concern over CO2 emissions is pushing people to smaller cars so much so that manufacturers such as BMW, Audi and Mercedes are moving to Golf-sized small cars. There is a wave towards small cars in Europe and North America exemplified by GM introducing the Chevrolet Aveo and Ford, the Fiesta (in a size smaller than the model here) in the US. How much further this will lead to bringing down prices and vehicle specifications to Nano’s category, I don’t know. During the energy crisis of the 1970s, there was a similar move to smaller cars but once the pressure eased people gravitated to SUVs. Whether the current trend is a temporary one like that or is it a structural change in the industry remains to be seen.