Tata Nano

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ECONOMIC ANALYSIS OF
TATA NANO
Index
1. Company Overview of TATA motors
2. Market Demand
3. Total Sales Estimation
4. Producers Behaviour
5. Cost Structure & Pricing Strategy

1. Company Overview of Tata Motors Ltd.

Tata Motors Limited is India’s largest automobile company, with revenues of Rs. 35651.48 crores (USD 8.8 billion) in 2007-08. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world’s fourth largest truck manufacturer, and the world’s second largest bus manufacturer. The company’s 23,000 employees are guided by the vision to be “best in the manner in which we operate best in the products we deliver and best in our value system and ethics.” Established in 1945, Tata Motors’ presence indeed cuts across the length and breadth of India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company’s manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh) and Pantnagar (Uttarakhand). Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The company is establishing two new plants at Dharwad (Karnataka) and Sanand (Gujarat). The company’s dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India.

PRODUCT OVERVIEW

Tata Nano is the cheapest car in the world. It is sold in home country India at around Rs 1lakh i.e. approximately USD 2000. It is manufactured by Tata Motors Limited, the largest automobile company in India. It’s Chairman, Mr. Ratan Tata envisions that Tata Nano to become a “People’s car“ which is affordable by almost everybody. Tata Nano was first launched in India on 1st April 2009 and expected to be in Indian market by July 2009. Since launching, it has created a huge buzz all over India. Within the first two days of lunching, it has received 5500 booking. The figures kept increasing every day since the launching. What makes Tata Nano so cheap? Basically, by making things smaller, lighter, do away with superficial parts and change the materials wherever possible without compromising the safety and environmental compliance. There are three models of Tata Nano car available i.e. Tata Nano, Tata Nano CX and Tata Nano LX. Nano has got to do something for the people of India and transport. Unavailability and poor quality of mass transport is a common problem in India. In a two wheeler, father driving with elder child standing in front and wife behind holding a baby is norm in this country. Thus, this is a relatively an unsafe mode of transporting a family. Thus, with this in mind Tata Nano was created as a safer form of transport. 2. MARKET DEMAND

The Tata Motors has finalized 1.55 lakh customers for its small-car Nano. The Nano is the world's Cheapest Car. The company will start delivering from next month. Tata Motors, would deliver the first one lakh cars by March 2010, while the handing over of the Nano’s in the next phase to 55,021 customers would start thereafter. There were 2,06,703 applicants out of which first 1,00,000 had been selected. The company has also completed the selection process for the second phase by allotting slots to 55,021 customers. The entire selection process was done through a computerised lottery. Consider the NANO's low purchase and running cost, the more its demand will be for the markets into which it will be introduced, the more it will be bought. By this paradigm, it is also assumed that with nearly 25 km/l of fuel efficiency, lesser the fuel consumed by the car, more the number of NANOs will be purchased by the people.

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