Monday, May 12, 2008

Innovation leads to imitation

Bajaj, Nissan (the world's 7th largest automaker) and Renault (the world's 9th largest automaker) have announced a joint-venture to chase Tata (the world's 20th largest automaker) in the market for low-cost cars. With their announcement of their own 1 lakh car, to be available in 2011, it is clear that the value of the innovations leading to the Tata Nano are sufficiently clear that other (much larger) automakers are imitating their formula and releasing their own ultra low-cost automobile.

Leaving aside the risks of growing congestion, this is a good example of how radical innovation can lead to enhanced consumer benefit :: Tata's Nano has spawned (so far) one imitation which, competing with the original idea, will ultimately lead to a better quality product available for the consumer. I think it inevitable that the other major Indian players will follow suit and these ultra low-cost cars will lead to an entire new segment of transportation for India and, eventually, globally.

Tata's innovation has spawned a new world-view of transportation before a single consumer has logged 1km on the road.


No comments: