When Carlos Ghosn, the chief executive of the Franco-Japanese alliance of Renault SA and Nissan Motor Co., visited India early in 2007 to do a deal with Mahindra and Mahindra Ltd (M&M), he coined the term “frugal engineering” to highlight the ability of Indian engineers to produce more with less resources.
So taken up was Ghosn with the concept that he visited India later in the year to sign two more pacts, with Ashok Leyland Ltd and Bajaj Auto Ltd, for making small trucks and smaller cars.
What ticked his imagination and that of the rest of the world was what has come to be called the Tata Nano, the Rs1 lakh car from Tata Motors Ltd, which critics had dismissed as impossible to do.
“We have been able to build a small, well-packaged, very affordable four-door, four-seat car that is economical to operate,” said Ratan Tata just prior to formally unveiling the car.
Inside view: Interior shot of the Tata Nano. Company chairman Ratan Tata said the car was a result of no radical changes, no reinvention of the manner in which a car is produced. (Photo: Ramesh Pathania/ Mint)
Noting that “virtually everything was developed ourselves,” Tata said the car was a result of “no radical changes, no reinvention of the manner in which a car is produced. A host of small and medium issues that has made it possible.”
The key breakthrough is that his company was able to, in a “small space, package a car quite effectively,” he says.
Indeed, Tata Motors is now going to start selling—later this year—a car that is not only the cheapest but also boasts of an engine that will be ahead of its time in meeting emission norms within India.
Frugal engineering as a concept is nothing new, says I.V. Rao, head of engineering at Maruti Suzuki India Ltd, India’s largest car maker, which has been publicly sceptical of efforts to sell a car for Rs1 lakh. The company’s Maruti 800 is today the cheapest car on Indian roads, retailing for around Rs2 lakh.
“Volumes are lower in India compared with other markets, such as Europe and North America,” notes Rao. “So, we are used to being practical and sensible and look at the economically most viable things in terms of design and usage.”
He cites the example of piecemeal automation in Maruti’s factories, which have the same efficiencies and productivity as fully automated factories in developed markets. Labour costs in India are often as low as one-fifth of those in developed countries, and Indian firms use more manual input in production.
“There is no rocket science to it,” said Pawan Goenka, president, automotive, at M&M, which partnered Renault for making the Logan sedan. “It comes from a culture of not wasting anything.” Mahindra engineers, for example, were able to shave 15% off the cost of the Logan by adopting methods such as local sourcing of machinery equipment and tweaking vehicle specifications to meet Indian norms.