A Project on Tata Nano

Submitted by: Canute Fernandes (12BSP1868)

Background: Tata Motors dates back to mid-1900s. In 1945, Tata Motors was incorporated as Tata Engineering and Locomotive Company Ltd. Three years later, it launched a steam road roller in association with UK-based Marshall Sons. Abstract: The car was the result of a 5 year research and development project carried out by Tata Nano development team. Analysts opined that Tata Nano had created a new segment in the passenger car market. However, they were concerned about the company's lack of capacity to fulfill high demand. Considering the low margins the company would get, it would take a long time for the project to break even. Deal of Tata Nano: A loan of Rs. 9750 Crore at 0.1% simple rate of interest. Repayment of this loan @ 0.1% over 20years. They got 100% exemption on electricity duty. The 1100 Crores Land has been given with high subsidies without any stamp duty registration and transfer charges. The payment for land would be made in eight equal annual installment at a compound interest of 8% p.a. Generation of idea: (Brainchild of Ratan Tata) Strategy /Idea: Segment accounts for 92% of the two-wheeler market in India in terms of sales. With the launch of Nano (Rs 100,000 + taxes), the spillover will happen from two wheeler market to Nano. The engineering team achieved the cost target by implementing an innovative design and reducing cost by paying attention to each and every component of the car.

Market Analysis: Idea Screening Business Analysis Development Test Marketing Commercialization Idea Screening: Will the customer in the target market benefit from the product? What is the size and growth forecasts of the market segment/target market? What is the current or expected competitive pressure for the product idea? What are the industry sales and market trends the product idea is based on? Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the customer at the target price? Concept development & testing: Develop the marketing and engineering details Who is the target market and who is the decision maker in the purchasing process? What product features must the product incorporate? What benefits will the product provide? How will consumers react to the product?

 How will the product be produced most cost effectively? Prove feasibility through virtual computer aided rendering. Business Analysis: Estimate likely selling price based upon competition and customer feedback. Estimate the cost of the project. Estimate profitability and breakeven point.

Market Testing: Produce a physical prototype or mock-up Test the product (and its packaging) in typical usage situations Conduct focus group customer interviews or introduce at trade show Make adjustments where necessary Produce an initial run of the product and sell it in a test market area to determine customer acceptance Technical implementation Resource estimation Engineering operations planning Department scheduling Supplier collaboration Logistics plan Resource plan publication Program review and monitoring Contingencies Commercialization Launch the product

 Produce and place advertisements and other promotions Fill the distribution pipeline with product

Marketing Of Tata Nano:

Technical Specifications

Financial projection

 Tata Motors plans to produce 2,50,000 Tata Nano Cars (1st phase) taking the total production capacity to 3,50,000 cars by the end the next financial year. As of August 08 ,material costs have risen from 13% to 23% over the cars development Tata now faces the choice of introducing the car with an artificially low introductory price, raising the price of the car, or foregoing profit on the car the latter an unlikely proposition, while an increased price on the Nano will likely decrease demand How the cost was cut down? Cutting down the cost of the car by making things smaller and lighter, doing away with superficial parts & changing material wherever possible. Introducing the car with an artificially low price through government subsidies and tax-breaks The Nanos boot does not open. Instead, the rear seats can be folded down to access the boot. It has a single windscreen wiper instead of the usual pair. It has no power steering. Its door opening lever was simplified. It has three nuts on the wheels instead of four. It has only one side view mirror. The front seats are identical and have integrated headrests. Our biggest challenge was to keep the balance between cost and performance. The brief was that the vehicle should be attractive to customers without any compromises on quality and performance. The company has done a lot of innovations to bring the cost down,while the companys US-based product development teams are used to working on featurerich, content-rich products, the Indian product teams are more focused on cutting costs.

Expectations: According to one report, India as well as other nations, such as European nations, have great expectations from the Nano and are keenly awaiting it, especially the electric version of the Nano, making it in all probability the "world's cheapest electric car The car itself is expected to boost the Indian Economy as well as expand the Indian car market by 65%, according to rating agency CRISIL. The Nano, already in production, has already been listed in the Guinness Book of World Records as the world's cheapest car. Potential effect on the economy: Launch expanded the Indian car market by 65%, (CRISIL) The low price makes the car affordable The increase in the market is expected to push up car sales by 20% over the previous year. The unveiling of Tata Nano, caused a revolution, or triggered an important event in car market. CRISIL Research estimates, the consumer price of the car at around Rs 1.3 lakh. This brings down the cost of ownership of an entry level car in India by 30%. Singur factory pullout: Tata Motors announced on May 19, 06 that it will be manufacturing Tata Nano from Singur. Protests were started by a few farmers in the area against the acquisition of their lands by Tata. The cause was taken up by Mamata Banerjee. The situation escalated with Tatas threatening to pull out. There was widespread violence in the clashes between the police and the farmers on December 2, 2006.

 On December 4, 2006 Mamata Banerjee entered into a hunger strike. A 48-hour strike was later called by her. On the 24th day of her strike, Banerjee was given oxygen support and finally called off her fast after appeals from the then President Abdul Kalam and Prime Minister Manmohan Singh. Ratan Tata accused that the competitors had a role in the controversy. The acquisition of land was initially criticized in Feb 2007, but later approved by the Calcutta High Court (2008). As political unrest and rains hampered the construction, Tata Motors delayed the launch of Nano to Sept 2008. Tata Motors announced that they have suspended work at Singur.

On October 7, 2008, it was announced that the Chief Minister of Gujarat, Narendra Modi had signed a MoU with Tata Motors for allocating land for Nano factory in Sanand (Ahmadabad) district of Gujarat.