Today, my friend YV and I went to a Tata dealership to check out the new Nano car, just available this week in dealers in India. The Nano is billed as the world’s cheapest car, and in India is called the 1-lakh car. 1 Lakh is almost exactly $2000 at today’s exchange rate. However, like most cars, the actual cost is more than the promised prices. The actual cost, to drive off the dealer showroom is 155,998 rupees or $3125USD. I must say I was pretty impressed. The car had an amazing amount of interior room, didn’t look “cheap” in any way. If you want details, check out these reviews, which are all quite positive. Initially the dealers only have one for display, and you actually have to sign up for a lottery to get in the queue to buy one.

The Nano is a great example of a product designed for it’s local market. A lot of people in the West discount the Nano because it doesn’t have the safety features a US or European car has, it has basic suspension, no radio, etc. But you have to understand the people buying this car, are not people who already have a car, but they are the family of four that all fit on a two-wheeler now. So which is safer? Tata in one way bills this as “weatherproofing” the traveler, something that doesn’t happen in a two-wheeler or auto-rickshaw. There are a lot of companies already popping up in India to customize the Nano, there is even a franchise network begin established that you can buy the car is a kit form, assemble it and sell it. It’s interesting that autorickshaws, which are ubiquitous in India (see image below), cost about 75,000 rupees, so a lot of auto drivers will step up to Nanos. What will that do to traffic in India? Scary question..

Suresh, my driver, as a professional car guy said he would be concerned about the car’s reliability. That could be. And it could be that the Nano has an adverse effect on traffic and consumption. But it may not. There is competition coming from other car companies. But overall, the Nano in an inflection point of some sort, and is an example of a car company taking a calculated risk on something radically new. Maybe GM could learn something from Tata.