Tata Nano: the People's Car

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REV: JUNE 3, 2010

KRISHNA PALEPU BHARAT ANAND RACHNA TAHILYANI

Tat Nano – The Peopl Car ta o e le’s r dia k big. Ind must think small to stay b — Ra atan Tata, Cha airman Tata G Group In March 2009, Tata Motors India’s larg , s, gest automob company by sales lau bile unched the world’s cheap pest car, the Tata Nano i India price at $2500 (see Exhibit 1 for a pict in ed ture of the N Nano). Throu ugh this laun nch, the comp pany realized Tata Group Chairman R d Ratan Tata’s v vision of mak king a “peop ple’s car” - a safe, affordab car which was within everyone’s r ble h reach. Ratan T Tata’s overar rching ambit tion was to build innova b ative product for the ma ts asses. He exp plained, “The aim is to c e create produ
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In 2009a, Maruti Suzuki India Ltd. was the leader in the passenger vehicle segment with 47% market share (see Exhibit 2a and 2b for competitive landscape for passenger vehicles in India and segment wise market share).3 This segment was expected to grow at a compounded annual growth rate of 14.5% in the period from 2009 to 2013.4 Bulk of this growth was expected in the passenger car segment, especially the small car segment on the back of the reviving Indian economy and shifting preference to fuel efficient and low maintenance cars. The UV and MPV segments were expected to grow because of reductions in taxes. The market was also witnessing a polarization with people 's preferences moving from sedans to small cars or utility vehicles.5 A 22% growth in premium car sales in 2009 had prompted players such as BMW and Mercedes Benz to expand in India. Exports were another growth area and India’s largest markets were Asia and Africa and as output quality improved Europe was also gaining in importance.6

Tata Group
The Tata Group founded by Jamsetji N. Tata in 1868 as a trading firm, was India’s largest conglomerate with revenues of $70.8 billion in 2009. Its 98 group companies, operating in more than 80 countries in across seven business sectors—information technology and communications, engineering, material, services, energy, consumer

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