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A Nano Car in Every Driveway? How to
Succeed in the Ultra-Low-Cost Car Market
Henry Ford’s historic promise in 1908 to “build a car for the great multitude” resulted in the production of more than 15 million Model Ts and created unprecedented mobility for consumers everywhere. Will India’s Tata Motors deliver on its equally bold promise to a new generation of consumers to bring the Nano to market for the “great multitude” at a price of $2,500?

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o fulfill his promise “to build a car small enough for the individual to run and care for, [of ] the simplest designs that modern engineering can devise, [and] low in price,” Henry
Ford exploited innovative product design, vendor relationships, manufacturing techniques and

distribution methods. One hundred years later, entrants into the ultra-low-cost car (ULCC) market have the same agenda in their attempt to build a car with a price tag of $2,500 to
$5,000, which is lower in comparable dollars than Henry Ford’s $850 Model T.

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But this is not a history lesson that can be easily repeated. Today, all indicators point to an automotive industry in recession, requiring its leaders to balance the global economic crisis with future market demand. Industry consolidation and restructuring in global markets will accelerate, propelled by the lack of availability to capital and consumer financing, high fuel costs and low consumer confidence.
Undoubtedly, a new and improved automotive operating model will emerge from this crisis, facilitated by innovation and low-cost solutions to serve the demands of a broader market of consumers. Perhaps the launch of the ultra-low-cost car marks the beginning of a redefinition of the competitive landscape for the entire industry.

Over the longer term, the emerging ultralow-cost car market promises to create rich