Positioning the TATA Nano

SECTION B GROUP 4:

NARENDRASINGH ANURAG B SETHU AKSHAY ANURAJAN AVADHESH JAYESH

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 ?

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.

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

 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

Segmentation of passenger vehicle

Segment A B1 Description Entry level hatchback (ex- Alto , maruti 800) Hatchback (ex - Tata indica) Price range Under 3.5 lakhs 3.5 to 6 lakhs

B2
C1

Hatchback
Sedan

6 to 7.5 lakhs
Under 8 lakhs

C2
D1 D2

Sedan
Premium sedan Luxuty sedan

8 to 9.5 lakhs
Under 15 lakhs Under 25 lakhs

THE NANO
2007 Geneva auto show - worlds smallest and cheapest car and most fuel-efficient which would be known as peoples 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 NANOs 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

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.

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

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

 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.

Positioning of Nano

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

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

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

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