Innovating Cheap: The Key to Tapping the Enormous Potential of Emerging Markets: Part Two
By Bill McBeath
on Aug 2, 2011
How was Tata able to build a $2,500 car? Here we dig into some examples of their 'frugal engineering' approach.
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Part One of this article described how Tata decided to build a car that was within the budget of India’s burgeoning middle class, meaning a price of ₨100,000 (~$2,500). Many said it couldn’t be done. The Nano’s design engineers in India threw away conventional ideas about how to design and build a car in order to meet those extremely aggressive cost goals. Here in part two, we explore some examples of this ‘frugal engineering’ approach.
Frugal Engineering Example1: Seat Design
A typical seating assembly might have 100 different parts, such as various trim pieces, an adjustable headrest, a fairly complex integrated seat track and recliner mechanism, perhaps leather or other high cost fabric for the covering, and stamped metal for the frames. In contrast, the Nano seat assembly was designed using thinner foam to save on material, very few covers or trim pieces, headrests integrated into the seat itself, and a much simpler and unconventional track and reclining system.
Typical Seat Design
Nano Seat Design
Figure 1 - Frugal Engineering in Seat Design
Frugal Engineering Example: Dashboard Assembly
Dashboards in most cars are highly styled, with many, many components such as add-on panels to create different versions, a glove box with all its mechanics, air vents customized for the specific dashboard, and usually a state-of-the-art sound system. The Nano was designed for function first, styling second. It is a single piece dashboard, which reduced tooling cost (Overall the Nano required just one third the tooling costs of a conventionally designed car). The dashboard is symmetrical with the instrument panel in the center, allowing the same dashboard assembly to be used in cars with either left or right driver’s seat. There is no glove box and no radio (but it is prewired for a radio which can be added). The air vents are circular, so pre-assembled standardized vents can be used.
Typical Dashboard Design
Nano Dashboard Design
Figure 2 - Frugal Engineering in Dashboard Design
There are many other examples of frugal engineering, such as the fixed tailgate that does not open. That design eliminates many components, such as the gas balancer, latches and lock, hinges, and rubber seal, as well as removing the structural stiffening requirements for the surrounding frame to withstand the slam of the tailgate. The Nano also has no need for a fuel filler door, since the filler is in the trunk. The door locks are much simpler than a conventional design. The base model has no A/C, heat, or radio.
This may seem like lots of compromises. But for a typical lower-middle class Indian family whose alternative is owning nothing or perhaps a motorbike, the Nano looks pretty nice.
Manufacturing the Nano
The Nano is built at the Sanand Plant in Gujarat, India. Remarkably, the plant was built in just 14 months. It sits on 725 acres with an adjacent supplier park. It is a state-of-the-art plant with the ‘right number’ of robots taking into account the low cost of labor in India. The plant employs 2,400 workers and has the capacity to build 250K vehicles/year, expandable to 350K/year. The Nano has a significantly lower part count than a conventional auto and it takes fewer tools to build it, further reducing the cost.
Designing for Emerging Economies
The Nano is not certified for sale and use in the US where it would not meet current standards. However, Tata Motors first showed the Nano at the 78th Geneva Motor Show in Febuary 2008 and the car captured the world’s attention. In January 2009, Tata Technologies showed the first Nano in North America at a special exhibit at the Detroit Science Center during media week of that year’s North American International Auto in Detroit. It received a tremendous amount of press, and rightly so. It represents a major engineering accomplishment. But more profoundly, it represents the ascendance of India, along with China and other developing economies.
Products designed to succeed in those markets should see very strong growth, as those economies are growing at rates two to four times faster than the developed world. Beyond that, many of the techniques and lessons learned in serving those markets can be brought back to make much more cost competitive product versions in the developed world, often without compromising quality or features. With the current stagnant economy, lowering costs can be critically attractive to consumers and important to sustaining good profit margins. Frugal engineering sounds like a winning strategy in today’s world!