2. Case Overview
• In 2009, launch of Nano from TML
• Problem in front of Ratan Tata - How best to
position his new brand – ultra low cost cars
• Option One – Family transport
• Option Two – Usage situation
• Which option to choose ?
3. The TATA Group : Company History
• Founded by Jamsetji Tata in 1868 as trading
company
• First steel mill, power utility, luxury hotel and
international airline
• By 2011, 98 companies over 7 sectors.
• Company seen as Inspired trust & a strong
commitment to ethics
• By TATA Code of Conduct, TATA promised to
improve the quality of life and Nano is a prime
example.
4. The automotive industry in india
• Automobile industry flourished with an average growth rate
of 17 percent annually post liberaliszation
• In 2009 industry produced more than 11 million vehichles
5. • Despite growth, per capita ownership of automobile is low
compared to developed countries
• Estimated 12 car owners per 1000 people, versus 765 per
1000 in US and 426 per 1000 in UK
• Two wheelers dominate Indian market due to fuel efficiency
, low purchase, and low maintenance cost
• About 76 % of all vehicle sales in India are of 2 wheelers and
remaining are passenger vehicle
6. Segmentation of passenger vehicle
Segment Description Price range
A Entry level hatchback
(ex- Alto , maruti 800)
Under 3.5 lakhs
B1 Hatchback
(ex - Tata indica)
3.5 to 6 lakhs
B2 Hatchback 6 to 7.5 lakhs
C1 Sedan Under 8 lakhs
C2 Sedan 8 to 9.5 lakhs
D1 Premium sedan Under 15 lakhs
D2 Luxuty sedan Under 25 lakhs
7. THE NANO
• 2007 Geneva auto show - “world’s smallest
and cheapest car” and most fuel-efficient
which would be known as “ people’s car” at
Rs. 1 lakh price.
• To reduce the costs associated with parts and
manufacturing without compromising quality,
Tata partnered with different suppliers
including GKN Driveline India (driveshaft)
• The development of the NANO’s engine i.e.
two cylinder 624 cc ,was left to Tata motors
• 3 models : The Nano, The Nano CX and The
Nano LX
• The Nano met Rest. 1 lakh goal by omitting
many features like power steering, power
window, ac etc. Whereas The Nano CX and
The Nano LX offered more luxurious car at
higher price
8. • First year, TML planned to produce 3,50,000 Nanos at a
plant being built at Singur, WB.
• Conflict at Singur
• In September 2008, shift to Sanand, Gujarat – with delay
in production of 18 to 24 months.
• By not postponing the much anticipated launch, TML
started to produce 50,000 Nanos temporarily at
Pantnagar plant, Uttarakhand.
9. Competition
• Maruti 800 : most affordable car in India until the
release of Nano
• Current major competitor : Maruti Alto
• Future competition : ULC cars from
Hyundai, Maruti, Habib Motors, Renault Nissan, Toyota
and Ford
• Two wheeler segment – low price, fuel efficiency, easy
maneuverability, low maintenance cost compared to
Nano
• Consumer behavior – more value for money
slightly more cost, but better engine, safety
features and more space – Wagon R, Santro Xing,
Chevrolet Beat, Alto etc
10. Distribution Channels
• A 17-day booking window, of which customers
would be selected via lottery
• Booking options :
Online booking
Tata Dealership
Offline booking at SBI branches and various
Tata stores
• Deposit payment must
11. • Dealerships
214 dealerships across 28 states
Dealer margins cut down from 4-10 % to 2-3%
1% discount if dealer paid cash upfront
• Toyed with the idea of using entrepreneurial
engineers as local retailers
• Idea scrapped due to potential warranty and
liability issues.
13. 2009
• In April 2009, out of the initial bookings of
2,03,000 Nanos, 1,00,000 were selected using
lottery system
• Half bookings were for Nano LX, 30% for Nano
CX and 20% for the basic Nano
• The new Sanand plant provided a capacity of
2,50,000 units per year
• Open Sales through Tata Dealerships began
from a single state in 2009
14. 2010 onwards..
• Monthly sales grew peaking at 9,000 units per
month in July 2010
• In November 2010, when the car sales grew
22%, sales of Nano plummeted to a mere 509
units
• This was due to two causes:
– Rising safety issues
– Rising raw material costs
15.
16.
17.
18. Fire fighting
• Tata motors conducted an investigation. TML
issued a statement that the fires were a result of
“foreign electrical equipment” and not due to any
safety issues in car
• TML took measures and improved the electrical
system of the car
• TML also increased the 18 months warranty to 4
years or 60,000 Kms
• By December, the sales rebounded to 5,784 units
