Subject: Nano Tata-logy: The People’s Car
Date: 17 the September, 2011
TML is currently posed with a tricky question of how to go about the Tata-Nano (the much-hyped “People’s Car”) business strategy, given its commitment to release it on time with the promised cost and the spectrum of issues and recent developments that pose potential hurdles. Issues
1. Political problems at Singur Plant which will certainly delay the Nano launch hinder meeting the demand and might increase production costs. 2. Would the strategy of becoming a “Systems Integrator” for Nano production be profitable and sustainable? 3. Affordability to produce Nano given such low margin (5.5%)?
1. Competition from other Auto Manufacturers in small car segment(like Bajaj, Nissan, Renault, Maruti-Suzuki). 2. The pricing of Nano brings it into direct competition with Scooters/Moto Bikes and Used cars.
Given Tata group’s commitment and reputation for patronizing environmentally sustainable behaviour, will it be appropriate to saturate the market with multitude of low cost cars that will surely increase auto-emission levels and congest traffic. Also, the strategy of providing entrepreneurship opportunities to rural youth by providing know-how for Nano assembly might backfire on the brand’s reputation.
Given the respect that Tata brand has earned in Indian market, a failure to launch Nano in the last quarter of 2008 will have a negative impact on the Brand image and add fuel to the existing market speculations about Nano. Relocating production capacity elsewhere from Singur as an alternative option will definitely increase the production costs, but will be aligned to the sustainability objective of TML related to society, since the Singur land has been acquired without adequate compensation and consent of the owners. The financial implications of halted...