Tata Motors Hbr Case - Profitability of the Nano

During this project I researched on how TATA developed NANO costing Rupees1 lakh ($ 2500 U.S) and what will be its effects. A survey was also done for understanding consumer buying pattern and preferences (which is a part of secondary data).

With the launch of Nano, the dynamics of India’s auto industry are likely to undergo major changes as wide spectrum of auto manufacturers ranging from two-wheelers to cars will come under intense pressure to minimize prices as much as possible. Success of Nano is expected to make every automobile company change the way it works and looks at the volume market. The creation of an ultra low cost segment has already created a shudder in the automobile industry. Many automobile companies have announced their entry into this segment while others have hinted price cuts to sustain demand. Industry experts believe that introduction of Nano will lead to a sharp drop in prices of used car and in turn will stretch the budget of a new car buyer looking for exchanging old car. This aspect will affect sales of all small cars like Wagon R, Zen Estillo, Santro, Indica, Hyundai ‘i10’ and Spark.

The Tata Nano is a small car manufactured by Tata Motors made and sold in India.

Compassion and empathy for his fellow human beings has always been a motivating factor in the life of Ratan Tata. When Tata began his venture into automobiles in the early 2000’s, he had in his mind that eventually he would like to produce an economical vehicle for the poor of his beloved India. Tata is a master deal-maker. He brilliantly purchased steel mills, hotels, and even underwater

In 2002, the Indian government formulated an “Auto Policy” which aims at promoting integrated, phased, and self-sustained growth of the Indian automobile industry.

2. How else could Tata Motors compete with ford, Honda, Toyota, and other rivals? Could Tata Motors focus on competing as a parts supplier instead?

Increasing disposable income and availability of better alternatives have raised the customer expectations and array of choice. This has led to a decline in consumer loyalty towards particular vehicle brand. The bargaining power is enjoyed highly by Indian consumers.

During this time of economy unrest, consumers will be more cautious and controlled over the usage of their disposable income, with preference for a lower-priced alternative. Even though being seen as a brand for affordable cars, Tata Motors seemed to be taking a hit on its brand appeal, with a slowdown in consumer demand for the Nano (Muralidhar, 2013).

The study was done with the primary data using questionnaire as a tool to assess the relationship between price and affordability, mileage, power, appearance, Comfort and few other variables on buying behaviour of Maruti car owners. Since the aim of the survey is to allow every person to list his/her opinion about their preferences in cars and models, closed ended questionnaire was prepared for primary data collection. The secondary data was collected through various books, journals and websites. The sample for the research is randomly selected from the population and the sample size is 52.

Tata Motors was formerly known as TELCO (Tata Engineering and Locomotive Company) is a leading global automobile manufacturer. Originally it was manufacturer of locomotives named as TELCO, the company then manufactured its first commercial vehicle in 1954 having a tie-up with Daimler-Benz. Tata motors have a wide range of variety from heavy commercial vehicles to carriers, buses, SUVs and passenger cars that covers a wide range of cars, sports vehicles, buses, trucks and defense vehicles.

Tata Motors was formerly known as TELCO (Tata Engineering and Locomotive Company) is a leading global automobile manufacturer. Originally it was manufacturer of locomotives named as TELCO, the company then manufactured its first commercial vehicle in 1954 having a tie-up with Daimler-Benz. Tata motors have a wide range of variety from heavy commercial vehicles to carriers, buses, SUVs and passenger cars that covers a wide range of cars, sports vehicles, buses, trucks and defense vehicles.

Tata Motors-have aussi Followed the footsteps beens and a pioneer in Technical Advancements in automobile sector. Tata Motors Benefit from the advanced Technically engineers operate in more than That 20 publicly traded companies Tata Group for it's R & D practical purposes. As Ratan Tata Said "The foundation of the company's growth is a deep understanding of Economic stimuli and customer needs, and the Ability to translate customer-Them Into Desired offerings through leading edge R & D". Tata Motors employs more than 1400 Scientists and Engineers All which make Tata Motors a winner in terms of technology in home market. Tata Indica, first as Indigenous, and Tata Nano, world's cheapest car, are examples of the technical capabilities and cost effective production efficiency of Tata Motors. Tata Motors-have-been Continuously investing around 2% of it's annual profits in research and development to stay ahead in the competition. Tata Motors is equipped with the 'only certified crash test facility in India' and Tata Motors set up it's European Technical Centre in 2005 That Improved companies competency in design engineering and product development. In services also, Tata Motors Developed has a -Electronic Control Unit as Compared to the Conventional Unit That the marriages accessories in a Manner effective sans Requiring a full fledges servicing

According to the Ministry of Commerce and Industry, the automobile industry in India has seen a tremendous compound growth at the rate of 22 % between the year 1992 and 1997. Furthermore, the annual turnover of the automobile sector in India, in the financial year 2002-2003, is said to have surpassed the capital investment of Rs 50,000 crore. With Indian automobile corporations gaining international market, the turnover in the similar year was calculated to be Rs. 59,518 crore. The Indian automobile industry will be a standout amongst the leading in the globe. Those business accounts to 7. 1 percentage of the country 's horrible down home item (GDP). Likewise around FY 2014-15, around 31 % of little autos sold comprehensively need aid made over India. The two Wheelers section with 81 percentage business sector allotment is the pioneers of the Indian car business owing with a developing white collar class What 's more an adolescent populace. Moreover, the developing investment of the organizations in exploring those provincial business sectors further helped those development of the division. Those Generally speaking passementerie vehicle (PV) section need 13 percentage business stake. India may be also a conspicuous auto exporter and need solid fare growth desires for those close future. Clinched together with April-January 2016, fares of business Vehicles enrolled a Growth from claiming 18. 36 % through April-January 2015.

India is a developing country and is have lot of population with middle and lower middle class. Two -wheeler is most affordable vehicle for personnel ownership. Many couples with kids travel in single two wheeler. It was Ratan Tata’s dream to have a car, which these families can afford [3].

Ratan Tata, chairman of Tata Motors Ltd., hoped to raise the status of Middle class families in India by offering the Tata Nano. Expectations were increasing amongst the customers regarding the product features and its efficiency. Competitors were eagerly waiting for its arrival to find out what they were going to be up against. It had strong and convincing features and was actually a good product. Unfortunately there were too many strategic marketing problems that kept it from being as big as they thought it was going to be. We will explain the problems it met and showcase some alternative solutions that could be implemented.