Forbes Magazine reviewed the new car from Tata Motors in "Nano Lives Up To The Hype."  Although we've known Tata Motors was designing and preparing this low-end car for a couple of years, most people were ignoring it.  But now it's here, and according to Forbes the $2,000 car exceeds expectations.  It's not a golf cart on wheels, it's "a proper car."   And it's about to go on sale in India.

So the world's largest car company, General Motors, is on the edge of bankruptcy – only able to stay out via the largesse of loans from the U.S. government.  Their sales are down 40%.  And at the same time, from far away in a country well known for poor roads, emerges a new competitor ready to sell cars at 1/5 the price of any car sold in America – or the rest of the western world.  Do you suppose the executives at GM or staying awake worrying about the Nano, or do you think they are ignoring this car altogether while trying to figure out how to sell more Chevy's?

Admittedly, the Nano comes from the fringe of competition.  People don't think of manufacturing when they think of India, they think of IT.  And they sure don't think of cars.  Powered rickshaws maybe.  And the car itself weighs only about 1,350 pounds – half what any other car weighs.  It's really designed for performance up to about 40 miles per hour, and it's not a great performer on the way to reaching the top speed of 65.  Although loaded with interior room, it has no back access – not even a fuel hatch.  It would be very easy to ignore.  It's easy to say this may be the next Yugo.  But, this one seems a lot more like the original Honda Civic in 1973.  Bare bones vehicle from a foreign country that's cheap, but otherwise "not up to American standards?"  Or is it a bare bones car from a new competitor with a strong desire to learn, improve and eat into the share of current competitors?

Any car executive who's smart is paying a lot of attention to the Nano.  Firstly, it demonstrates making a car at an unheard of price.  For much of the world, this offers people their first chance at an automobile of any kind.  So it brings in new users who would otherwise be left out.  It's price, alone, shows that in a global economy, auto production is headed toward lower prices due to lower world-wide cost.  If this vehicle is satisfactory to westerners, or can be made satisfactory over the next few years, it may never again be possible to pay American labor rates for producing automobiles.  For basic transportation, American labor may be too expensive.

Additionally, the Nano went from idea to car in about 3 years.  No 5 or 6 year cycle, like American car companies desire.  Tata has demonstrated it can design and manufacture a car in about half the time of the existing auto companies. So the cycle time is shortened even more.  And that this car can be profitable at volumes a fraction of the American production runs shows that markets need not be enormous – and old notions about tooling and other fixed costs of production may be things of the past.

Nano demonstrates why we HAVE to obsess about competitors.  Including "fringe" competitors.  Because these new competitors are figuring out how to do things differently.  They are shooting for future markets, not past markets (like India, China, eastern Europe, South America, Africa).  They are developing new Success Formulas that have different requirements, possibly obsoleting the old Success Formulas.  It's so easy if you're selling books to say "no one will buy books on the web" when you see the early interface and business model for Amazon – rather than think where this new competitor will be in a couple of years.  If you're selling land-line phone service it's easy to deride the quality of early cell phones, and project they will never move beyond niche users.  But smart competitors know that when a new product is introduced by a fringe competitor, it's best to pay really, really close attention.  You may need to be more like that competitor than you realize in a great big hurry.