Case Paper: Tata Nano

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Since 1971, there has been an upward revision in the prices of Crude oil. Typically, demand for crude doubles every four years, but correspondingly output of crude increases only by 20 %. Thus a handful of oil producing nations can hold the rest of the world to ransom. Not too long ago, the western world, particularly USA would swear by the presence of a large car in their garages. This was considered a status symbol as all cars were fuel guzzling monsters! The invasion of the compact sized car in USA was largely attributed to the Japanese Auto industry. All of a sudden, American consumers had the opportunity to experience safety, security, fuel efficiency, hassle free parking and aero-dynamic design by the Japanese. Needless to say, they were an instant hit. Add to this the tremendous pressure on prices of crude oil, and one could see the reasons for success. By the year 2005, the picture for demand and supply of crude was already bleak. Countries which had large oil reserves were in a position of great strength. Tradationally ,India has never been a large auto manufacturing hub .During the Licence Raj system there was negligible access to new technology and imports were a big challenge. During that very year, an Auto show was held in Geneva, where Ratan Tata unveiled his plans of the “ People’s Car”, the Nano. This was to be priced inside of a lac of rupees. However , after their bitter experience of Singur. Tatas relocated their plant to Sanand in Gujerat. But Tatas have been struggling to sell volumes for the past few years. ( See accompanying article )

Q1) What modifications in the Nano, if any, would you suggest to Tata Motors? Q2) Which path seems appropriate to sell volumes in rural India ? Q3) Can Tata Motors look to export Nano to SAARC nations successfully? If so, how / if not , then why not? ____________________________________-___________________________________
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