Harnessing Energy through Knowledge
ECONOMICS & MANAGEMENT DECISIONS
MBA LSCM 1st YEAR
Submitted to : Submitted by:
Ms. K. Deepa Anoop(4),Ashish(9)
INTRODUCTION OF TATA NANO
TATA MOTORS, one of the leading players in automobile industry in south asia , the world’s second largest Bus manufacturer and 4rth largest Truck manufacturer, launched the cheapest car in the world , TATA NANO.
At the time of inception , the estimated purchase price for consumers was Rs.100,000(Indian) but a few years down the line , the prices of raw materials increased by 23% and the car price raised substantially. However the fixed prices in India are as follows;
TATA NANO CX
TATA NANO LX
Tata Nano however opened a completely new market segment catering to the lower middle class or middle class segment i.e. the lower income segment. Currently this is the only car available in this Ultra Small Car market segment. As a result, Tata Nano has established a Monopoly in this segment. The demand for the car is high because the car caters most of the low end consumers which is in a large quantity in India .The small-car segment basically is an Oligopoly with major players like Suzuki & TATA. Oligopoly basically is a situation in which a particular market is controlled by a small group of firms.
There are small firms involved in this segment because the other players do not have the technology to produce cheap cars as yet, the Nano will enjoy the first mover advantage for at least next couple of years as it does not see any threat from the competitors in the near future.
EFFECT OF TATA NANO ON THE CONSUMERS
• Views In Favour:
With the advent of Nano, 30% of the population of India was in a position to have the pleasure of owning a car. In a developing country like India, the price of the product is very important in attracting buyers and this is one of the major reasons for the car to be such a huge success in the country as well as across the globe. A similar kind of setup is proposed in Indonesia. Apart from the low cost, the car provides a better fuel economy (20km/l), greater space inside the car.
• Views Against:
But, there is again a class of customers who feel that the car is not suitable for long drive and luxury and are against the production of Nano as it will increase the load on already loaded roads since more people will want to buy it.
EFFECT OF NANO ON COMPETITORS
According to CRISIL with the coming of TATA Nano the Indian car market has grown up by 65%. The USP of the TATA NANO is its price and also that it has 21% more interior space and 8% smaller exterior. What this means is that a new market has opened to the competitors and players like Bajaj, Fiat, GM, Ford, Hyundai and Toyota have expressed their interests in getting into this affordable car segment. This will result in intense competition and...