Tata Nano - Strategy, Impact on the Automobile Industry

1090 WordsMay 7, 20085 Pages
Cost Management and Strategy used The great wonder car by Tata’s has stunned the entire world. Critics who often said that it was not possible to make a car at a price below $3000 were taken to a back sit when Ratan Tata the chairman of Tata Motors unveiled this car in New Delhi at a price of $2500. Since then it has been in lime light and has been making news in the auto sector throughout the world. Much of India 's low-cost production edge comes from cheap labor and a large part of the low-cost assembly in factories and plants is done through manual operations. However this situation is changing fast with companies wanting to increase productivity by automating their lines. Tata cut costs by minimizing components, particularly steel,…show more content…
On the onset, the two-wheeler manufacturers would be forced to work on new technologies to make better motorbikes and scooters. This would also in turn influence the price tag of the two-wheelers. Impact on 4 wheeler segment 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. While Maruti is already working on re-pricing its cheapest offering – Maruti – 800 aggressively, Bajaj Auto has firmed up plans to enter into the

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