Ultra low cost car


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Detail explanation of Ultra low cost car segments.
brief explained with an example of TATA NANO CAR
Global Market study and forecast of Ultra low cost car.
Its product development and Approach.
Challenges and Opportunities of Ultra low cost car segments

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Ultra low cost car

  1. 1. ULTRA LOW COSTCARSPresented By- Chandan Nagaraja
  2. 2. What is ULTRA LOW COSTCAR..?• Ultra low cost car segments costs between$2,500 to $5,000 (€1,750 to € 3,800) or less than$5,000.• It has basic components and needs required bythe car.• Ultra low cost car is targeted to lower middleclass, whose income ranges between $2,000 to$5,000.• India and most of the developing economies isthickly populated with lower middle class people.
  3. 3. Automotive Examples - HistoryFord model T in 190820 hpOriginal Cost = $850( Equivalent to Today‘s market value =$20, 700)VW Beetle in 195634 hpOriginal Cost = $ 1,995( Equivalent to Today‘s market value = $12, 333)Austin Mini in 196124 hpOriginal Cost = $ 2,100( Equivalent to Today‘s market value = $12,900)
  4. 4. World‘s First Ultra Low Cost Car– Tata Nano In 2008, Tata Motors from INDIA launchedNANO car World‘s cheapest car Cost = 1 lakh Indian Rupees (€1750 , $2,500) Stylish, comfortable Fuel-efficient engine (23-25 Kmpl), 33hp Meets all safety requirements Environment-friendly Popularly it is hailed as the “People’s Car”
  5. 5. An idea can make billion peopleSmile.
  6. 6. Seeds of the Dreams.I observed familiesriding on two-wheelerthe father driving thescooter, his young kidstanding in front ofhim, his wife seatedbehind him holding alittle baby. It led me towonder for such a carwhich is safe &affordable to anyMiddle class family.Mr. Ratan TataProblem
  7. 7. TATA NANO – Dream – Criteriaand Success [Dream] - ―It led me to wonder whether one could conceive ofa safe, affordable, all-weather form of transport for sucha family” [Criteria] - ―Tata Motors‘ engineers and designers gave theirall for about four years to realize this goal. Today, we indeedhave a People’s Car, which is affordable and yet built tomeet safety requirements and emission norms, to be fuelefficient and low on emissions‖ [Success] - ―We are happy to present the People‘s Car toIndia and we hope it brings the joy, pride and utility of owninga car to many families who need personal mobility.‖
  8. 8. The ONE lakh car that drives ONEbillion dreams…
  9. 9. Why do we need ULCC…? According to Statistical data and analysis, most of the indicator points to anAutomotive industries is in recession, especially after 2008 global financialrecession. Automotive leaders should balance between global financial crisisand future market demand. Industrial consolidation and restructure in global market willaccelerate, however it is propelled by the lack of availability of capital andconsumer financing, high fuel costs and low consumer confidence. Undoubtedly, a new and improved automotive operating design model willemerge from this crisis, facilitated by ―New Innovation‖ and ―Low CostSolution‖ to serve the demands if a broader market of consumers. Perhaps, the launch of Ultra-Low Cost Car segment is the Answer forcurrent crisis. ULCC marks the beginning of new era in automotive industryand redefining the competitive landscape for the entire industry.
  10. 10. FeaturesLength 3.1 metersWidth 1.5 metersHeight 1.6 metersEngineAll-aluminium, Rear Mounted, RearWheel DriveCapacity 623 ccPower 33 PSFuel Injection Multi Point Fuel Injection (MPFI)Fuel Type Petrol, Diesel Version will be laterBody Type Sheet MetalSeating Capacity 04 (Four)Mileage20-22 Kmpl (City drive)26 Kmpl (Highways)Top Speed 75 K.MEmission Norms Euro-IV, Bharat Stage-III compliantSafety Norms Frontal Crash TestedVersions One Standard and Two Deluxe
  11. 11. SWOT Analysis:• It‘s nearercompetitors BajajAuto are ready tointroduce ‗cars‘ lessthan the price of―NANO‖• No regular sizeluggage room.• No modernABS, ESPsystems• It can capture thelarge market in thesociety, i .e.―Middle class‖.• Cheapest car inthe World.• 21% more spacethan Mruti800.STRENGTHOPPORTUNITIESTHREATSWEAKNESS
  12. 12. The Global Sale Forecast forUltra Low Cost Car
  13. 13. Perspective Customers inIndia
  14. 14. Low-cost cars are selling inadvance and emergingmarkets
  15. 15. Top Ten Customer‘s Pocket Friendly Cars inthe WorldNAME OF THE CARS PRICE COUNTRY1. Tata Nano: 4-door $2,497. India2. Chery QQ: 4-door hatchback $4,781 China3. Suzuki Maruti 800: 5-doorhatchback$4,994 India4. Geely MR: 5-door $5,500 China5. Geely HQ SRV: 5-door "tall" estate $5,780 China6. Chery A-1: 5-door hatchback $7,340 China7. Tata Indica $8,500 India8. Hyundai i10: 5-door hatchback $9,096 South Korea9. Fiat Palio: 5-door hatchback $9,242 Born in Brazil andsold in Most of Asia& America10. Renault/Dacia Logan $9,477 Romania/Turkey/Iran/Latin America
  16. 16. Vertical view of the CurrentmarketThe expansive potential of this market is commanding the attention ofmanufacturers and vendors worldwide, with a number of global playersrecently announcing strategies to enter or compete in the sector .General Motors, which produces the mini-car, Spark, in India, expects tointroduce another low-cost car in 2015.Hyundai and Renault S.A.–Nissan have plans to produce a car for the low-cost car market.Skoda Auto, part of the Volkswagen Group, is investing in productdevelopment and plans to expand capacity in India.Fiat announced in August that it would market three models in China.A low price point and razor-thin margins— estimated at around 3% at thebase model levels—will make hard-to-come-by profits easily susceptible torising commodity prices, product launch missteps and market economics.
  17. 17. Preserve and ProtectorParticipate and Prosper?• The dynamic and powerful ultra-low-cost car market is forcing manufacturersand suppliers to decide between two strategies.• The first is to preserve their brand and market positions and protect themagainst new market entrants, current competition and future price pressures.Established suppliers opting for this stance risk falling into the ―low-cost trap‖between manufacturers and their new component standards and lower targetprices.• A new set of low-cost competitors will emerge with the potential to entermature markets and capture market share from the domesticsuppliers, forcing existing participants to protect their positions.• The other choice for manufacturers and suppliers is to participate to captureshare in the fastest growing segment of the industry and prosper by beingleaders in developing the market. We believe first movers will have theopportunity to capture market share and build consumer loyalty.
  18. 18. Then…..,How to Approach to UltraLow Cost CarConcept…….??
  19. 19. Apply a Clean-SheetApproach Early movers on both the manufacturer and supplier sides havedemonstrated that nothing less than a clean-sheet approach to productdevelopment and manufacturing can produce a vehicle that sells for lessthan $3,500. Tata Motors, for example, used this approach to develop theNano, the world‘s least expensive automobile, by adhering to four guidelines. Cooperate with suppliers. Reduce the number and complexity of parts Invent rather than Adapt - Tata Seeks 37 Patent Rights For Nano. The moveis also expected to help Tata Motors to sell the car in markets such asAfrica, Southeast Asia, Eastern Europe and Latin America -NANOVATION Standardize at every stage of the value
  20. 20.  The Tata Nano uses plastics and adhesives rather than welding. Introducing the car with an artificially low price through govt-subsidies and tax-breaks, or using vertical-integration, or partially using inexpensive polymers or biodegradable plastics instead of a full metal-body. It has no AC, no power steering, no power windows, no power bells and whistles, due to its low weight. The cars exterior and interiors were designed at Italys Institution of Development in Automotive Engineering. The Nanos design implements many measures that make its manufacture cheap. The Nanos trunk is only accessible from inside the car, as the rear hatch does not open. One windscreen wiper instead of the usual pair (also seen earlier on certain Citroen and Mercedes models) Three lug nuts on the wheels instead of the usual four and Only one wing mirror. Radio or CD player is optional (the idea picked on some basic car models in North America) No airbags on any model 624cc rear engine has only 2 cylinders. No air conditioning in base model (as on most basic car models in Europe and North America)
  21. 21. What makes it so cheap !
  22. 22. Traditional Mind-set• ― Too risky‖• ― Suppose it fails?‖• ― Impossible. Never done before‖• ― I don‘t see how that is possible‖• ― Somebody must have already tried it.‖• ― Too hard‖• ― Ridiculous‖
  23. 23. Question the Unquestionable• First time a two cylinder engine used in a car with single balancer shift.• Adhesives replacing rivets.• Co-creation with vendors and suppliers.• 100 vendors co-located to plant• Innovative business model for automobile dealership.• Look to other industries for ideas:Seats from helicopter – light, strong, high vibrationDashboard and fuel lines from scooter
  24. 24. ULCC is Driven By Innovation Innovative technology Innovative process Innovative systems Innovative delivery methods … and more
  25. 25. A ULCC on Europe‘s Roads? Probably.On North America‘s Roads? Probably Not.Three overarching factors will shape the ultra-low-cost car‘s future in both markets: Emission standards Safety Regulation. Distribution• An luxury Nano conceptcar called the Nano Europawas shown at the2009 Geneva Motor Show.• Tata Motor‘s has decided tolaunch in European market by2015.
  26. 26. The Strategy: What Works?What Doesn‘t? Create entrance and growth strategy Establish targets and make trade-offdecisions Align across functions and collaboratewith suppliers Measure of Creativity and Innovation Benchmark the competition Protect and preserve market positions
  27. 27. Final thought….!!!!!!• One day the dinosaurs died, they died becausethey ate too much and occupied too muchspace and they were a burden on the planet orrather prevailing Jurassic era society. Thencame the turn of the winged reptiles. Thewinged reptiles died to be replaced by the bird.• The Ultra Low Cost Car (Tata Nano) is thefuture of cars; Will it put an end to thedinosaurs, the Safaris, the Pradas, theScorpio and so on?