TATA NANO-THE MODEL T FOR THE TWENTY-FIRST CENTURY?

TATA NANO-THE MODEL T FOR THE TWENTY-FIRST CENTURY?

FOCUS NANTAI FOCUS NANTAI

INTRODUCTION• Tata Nano is the cheapest car in the world. • It is manufactured by Tata Motor Limited, the largest

automobile company in India.• It's also nation's third-largest automobile maker with

sales that have risen to more than 2 million today. • Mr Ratan Tata envisions that Tata Nano to become a

“People’s car” which is affordable by almost everybody.• Within the first two days of lunching, it has received

5500 booking. The figures keep increasing every day since the launching.

INTRODUCTION• According to Ratan Naval Tata (Chairman of Tata Group),

the need for an innovation like Nano has got to do something for the people of India and transport.

• Unavailability and poor quality of mass transport is a common problem in India.

• In a two wheeler, father driving with elder child standing in front and wife behind holding a baby is norm in this country.

• Thus, this is a relatively an unsafe mode of transporting for a family.

• Thus, with this in mind Tata Nano was created as a safer form of transport.

Comparison analysis of Nano with other cars

TERMS TATA NANO HYNDAI SANTRO

MARUTI 800 MARUTI ALTO

CHEVORLETSPARK

ENGINE 624cc 2cylinder inline, 4 speed manual

10866cc 4cylinder3valves cylinder, 5 speed manual/4 speed at

796cc 3cylinder 2 valves cylinder ,4 speed manual

796cc 3 cylinder 4 valves cylinder,5 speed manual

955cc 4cylinder, 2valves cylinder

TOP SPEED 106km 145km 108 km 138km 153km

FUEL EFFICIENCY

25kmplclaimed

12.5kmpl 15.72kmpl 14.85kmpl 16.45

Current Situation Tata Motors was established in 1945,

when the company began manufacturing locomotives.

The company manufactured its first commercial vehicle in 1954 in collaboration with Daimler-Benz AG, which ended in 1969.

In March 2008, it finalised a deal with Ford Motor Company to acquire their British Jaguar Land Rover (JLR) business, which also includes the Rover, Daimler and Lanchester brand names. The purchase was completed on 2nd June 2008.

Product & Promotion • Stylish and comfortable• Fuel-efficient engine• Meets all safety requirements• Promotion Tag line• Though the one lakh price tag is not fixed by

TATA group, it was the word of mouth of people which fixed that range. This expectation of people creates a big challenge for the company.

• Target costing method• Penetration pricing• Low pricing policy with minimum profit

margin

‘Have Fun, Pay Less, get more with Tata Nano’

TARGET MARKET

• The company is targeting lower & middle income group with family!

• First-time buyers of car (fresh graduates) • Motorcycle owners. • Two Wheeler Market• Used Cars Market• second hand car user

SWOT analysisSTRENGTH Price, mileage, style, brand name, all weather vehicle,

first innovation.

WEAKNESS Fiber body, low suspension power, low engine capacity, light vehicle, not suitable for hilly areas, delay due to singur violation.

OPPORTUNITY Bikers can be motivated, auto rickshaw & second hand market can be motivated.

THREAT Other competitors (Honda, Maruti , Tara tiny) not eco-friendly, Govt. may come with new rule.

What makes Nano so cheap

Break even analysis• Break even analysis indicates that 3369 unit or $ 46,168,776 will be required in monthly sales revenue to reach the

break even point.• Table: Break Even Analysis• Break even analysis :•

• Monthly unit break even 3369• Monthly sales break even• $46,168,776• Monthly unit production 6083 1000 2000 3000 4000 5000 6000 7000

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

fixed costtotal costtotal revenue

Difficulties, risks, & Drawbacks • Body of the car is made of plastic. • The Fuel tank capacity is just 30 ltrs• There is some cases of car catching fire • Lack of all safety features such as no disc brakes,

engine is on the rare side so head on collision will have a greater impact on passenger, body is made of superlight material almost resembling fiber material

• Slow sales resulting less than projected cash flow• Unexpected and excessive cost increase

compared to the forecasted sales.• Significant economic downturns

Q1) Does the so-called one lakh (100,000 rupees) car really have potential beyond India? What criteria should Tata Motorse use for deciding which countries to enter? Should Tata also launch the Nano in developed countries? Why & why not?

The “one lakh car” have a potential in India…

• India represent a real potential for automobile market because of its One billion population.

• Indian’s automotive market can rival the U.S., China and Japan...

• The need for an innovation like Nano has got to do something for the people of India and transport. Unavailability and poor quality of mass transport is a common problem in India. Because of unsafe mode of transporting a family. So, with this in mind Tata Nano was created as a safer form of transport.

• India's car market is a huge draw because car penetration is just seven per 1,000 people, compared to 550 per 1,000 in such countries as Germany or 476 in France, according to the Society of Indian Automobiles. Thus, it represent a real opportunity for the one “lakh car”.

Yes, Tata should launch the Nano in developed countries…• World is getting tougher day by day being unique is a

competitive advantage. Expectations to Nano has proved this.

Why people would buy Nano in developed countries….

• Its low price. And people (low income & middle class) get all facilities in affordable price.

• Its look very attractive and available in many colors.• Its 20% more species then other low price car in India.• After buying Nano company serve all facilities through his own

service center.• We provide direct car loan facilities through your nearest bank

like SBI. United bank of India and many more.

No, Tata should not launch the Nano in developed countries…

• The biggest problem facing foreign manufacturers is establishing a dealer network in America, but Tata already has two because it owns Land Rover and Jaguar.

• Example of USA: The Nano lacks U.S. federally required safety equipment such as air bags, and the engine would have to be approved for U.S. emissions standards.

• "Based on the Yugo experience from 20 years ago [when Orlando native Malcolm Bricklin imported the Yugoslavian car for $3,995]. We believe that Americans would give a $5,000 Nano a try”.

"Some people don't care whether their car is sophisticated, so long as it's new.

The perceived advantage of a new car is reliability -- and if the Nano doesn't have it, customers would soon abandon it, just as they did with the Yugo."

Q1) Does the so-called one lakh (100,000 rupees) car really have potential beyond India? What criteria should Tata Motorse use for deciding which countries to enter? Should Tata also launch the Nano in developed countries? Why & why not?

Q2) What challenges do you envision in launching the Nano?

Before envisioning the launch of Nano, we need to be aware of :

• Nearest Domestic Car Rival: Maruti 800, part of Japanese-owned Suzuki Maruti stable whose base model sells for about 4,800 dollars -- nearly double the price of the Nano.

• Nearest International Rival: China's Chery QQ which retails for 3,600 dollars.

• We will envision to launch the Nano is European Market, and in developed coutries such as USA…

• Example: 1st step in international market- 2009, marked the 12th year of Tata motors participation in the Geneva motor show.

• The company presented the Tata Nano Europa, intended for future launch in select international markets.

• We will opt for cost-effective and innovative use of media.• TATA motors will share promotion of Tata brand with its multiple

bank partners. • TATA team is working of Nano news in papers, Nano breaks on radio,

nano appearing in form of massages or ticker news on TV, online nano games,nano chat room on the net nano pop-ups on major websites and nano conversation on facebook,orkut and blogspaces.

• Also available will be a hole range of nano merchandise like baseball caps,T-shirts and key-chains, among others.

• We will make transport easily available to common man in India (small/affordable/Stylish).

• The car itself is expected to boost the Indian Economy as well as expand the Indian car market by 65%, according to rating agency CRISIL

Q3) How should the Nano be positioned? Would you apply the same positioning strategy in, say, India &Germany or would you adjust it? If so, why & how?

How should the Nano be positioned? • Tata Nano will position itself as the world cheapest

car and yet does not compromise the quality, safety and environment.

• This positioning will be achieved by leveraging Tata Nano’s competitive edge: industries experience from the parent company Tata Motor who has been in vehicles industries (commercial, passengers & utilities) since 1945.

• Tata motor has good supplier-manufacturer relationship with more than 100 components

In Germany we would adjust our positioning strategy… • First, we can plan to export our Tata to Germany. a no-frills Nano,

the world's cheapest car. • In India, our price would be 2,500 EUR but would cost about

9,000 EUR in Germany and even at that price it would still be the cheapest new car available in the Germany.

• A low price alone won't be enough; the Nano will have to perform at least a little bit like a "proper" car.

• The Nano need to adapt to Germany’s required safety equipment such as air bags, and the engine would have to be approved for Germany emissions standards.

• "Some people don't care whether their car is sophisticated, so long as it's new. Thus, we will offer a new car the perceived advantage of a new car is reliability.

Q3) How should the Nano be positioned? Would you apply the same positioning strategy in, say, India & Germany or would you adjust it? If so, why & how?