Dark Suits

The $2,500 Car: "They scoffed when Indian industrialist Ratan Tata announced his plan to build a car that would cost 100,000 rupees--about $2,500 at today's exchange rate. Auto executives--the ones who spend more than that for each of their dark suits--called him crazy." -- Robyn Meredith, Forbes Magazine.
Comments:

On a somewhat but barely related note can you name the last American car for under $2000? I remember it well. At least riding in it and listening to my Mom's 8-Track of Helen Reddy singing along with her re-make of Delta Dawn.

Posted by ThinGuy on January 13, 2008 at 03:25 AM JST #

Jim, did you look at the specs?

The car is meant to transport up to four people, yet it only has a 2 cylinder, 0.65L engine with ~30hp. That won't be nowhere near enough power to haul four people... unless they're seriously malnurished. I write from my own experiences with 2 cylinder engines with around 30hp. It won't have A/C, CD player, no airbags or other amenities, and only a 4 gear manual transmission, which means the ratios will be inadequate for an engine with so little power.

I guess the biggest irony is that according to Tata himself, the car is aimed at people in rural India, yet it has virtually no space to haul stuff in. This vehicle is basically an Indian version of Mercedes's "Smart", elongated for two more seats and with a lot less horsepower.

Posted by UX-admin on January 13, 2008 at 10:53 AM JST #

Thin_guy ... a Pinto? :) I have no idea. Not much of a car buff. ;)

Posted by Jim Grisanzio on January 13, 2008 at 11:34 AM JST #

UX-admin ... yah, read the specs. It`s not going to win any races, but I bet it`ll do just fine with these other guys on the road: http://www.flickr.com/photos/jimgris/2103066386/in/set-72157603380370293/ Also, I think the specs prove that the product has the potential to be disruptive to others trying to sell there. Of course it`s inferior. That`s the essence of a (potentially) disruptive product. Who knows, it could die, but you never know. :)

Posted by Jim Grisanzio on January 13, 2008 at 11:39 AM JST #

The only thing that's disruptive about this vehicle is the price. That's what the $2,500 suits balk at. Everything else on this vehicle brings no innovation that we haven't seen already (well, at least that I haven't).

Remember the Yugo? $4,500, yet it was a fiasco. The consumers recoiled in shock when they learned about the level of "quality" that now former "Yugoslavs" had to cope with every day. Yugo was and remains the worst built car of the past century. Rightly so, but it was "disruptively cheap".

Posted by UX-admin on January 13, 2008 at 03:41 PM JST #

UX-admin ... a \*disruptive\* innovation doesn't have to be better (in terms of quality or features, etc). In fact, many times it's worse. That's the essence of The Innovator's Dilemma by Clayton Christensen.

Posted by Jim Grisanzio on January 14, 2008 at 02:30 AM JST #

Yes, but what exactly have they innovated?

Is a really an underpowered, cheap car with no amenities \*innovation\*?

Posted by UX-admin on January 14, 2008 at 04:27 PM JST #

Early cars sucked by today's standards, but boy did they massively change everything in the U.S. Is there any reason not to think that cheap crappy cars won't do the same for India and China? India and China are densely populated places, much, much more densely than the U.S. was a hundred years ago. This makes public transportation more economically feasible, but it costs a lot up front. So, small, cheap, crappy cars probably still have a leg up on every other option in those places. I bet Tata will sell many millions of these things. They'll be India's Ford model T, though they might come in more colors than just black.

Posted by Nico on January 14, 2008 at 06:52 PM JST #

Nico ... that's my thinking too. The US, European, and Japanese car companies probably can't produce anything at that cost level. So, for now anway, the market seems wide open for this one Indian company to sell and grow and scale with their customers.

Posted by Jim Grisanzio on January 15, 2008 at 05:43 AM JST #

UX-admin ... yes, that's the point of Christensen's book. A \*disruptive\* innovation doesn't have to be better, it just has to serve a market that an established competitor can't serve. Then over time, that entire \*new\* market grows -- product, company, customers, etc -- and the quality of the previously inferior product increases until at some point it starts to cut into the established competitors.

Posted by Jim Grisanzio on January 15, 2008 at 05:47 AM JST #

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