Tata Nano- a Blue Ocean

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TATA NANO- A BLUE OCEAN| December 10
2010
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Background
Between 1970 and 1984 cars were considered a luxury product; manufacturing was licensed, manufacturing was restricted; there were quantitative restrictions on import and a tariff structure designed to restrict the market. The market was dominated by 6 manufacturers - Telco (now Tata motors), Ashok Leyland, Mahindra & Mahindra, Hindustan motors, Premier automobiles and Bajaj auto. The decade of 1985 to 1995 saw the entry of Maruti Udyog in the passenger car segment. Economic liberalization, started in 1991, led to the delicensing of passenger car segment in 1993. This decade witnessed emergence of Hero Honda as major player in two wheelers and Maruti Udyog as the market leader in the passenger car segment. Situation in 2004-2005

The Indian automobile industry produced 8.5 million vehicles in 2004-05. During the financial year 2005-06, Indian automobile industry produced more than 9.5 million vehicles. The growth in production was 15%. Sale of passenger cars and utility vehicles has grown at 12% CAGR over the last decade. Two wheeler sales have grown at 11% CAGR during the last decade. Over the years sales of motor cycles has increased while sale of scooters and moped stagnated. With 5.82 million units sold in 2005-06(out of 7 million 2 wheelers), motorcycles replaced scooters as the preferred mode of transport. Visual Awakening (assessing the current environment) Factors market is currently competing on:

1. Fuel Efficiency
2. Price
3. Size
4. Design
5. Driving Pleasure
6. Passenger comfort
7. Durability
8. Engine Power BHP
9. Engine efficiency
10. Interior looks
11. Interior upholstery
12. Latest features
13. Colour variants
14. After Sales service
15. Spare Parts
16. Safety features
Major Players: The below diagram shows the major players in the passenger car industry and their competing factors.

 |  |  |  |
 | Tata Indica| Maruti 800| Maruti Alto|
 |  |  |  |
Price| Rs. 3,55,011| Rs. 2,15,203| Rs. 2,60,520|
Mileage (Highway) | 17.4 km/liter| 19.9 km/liter| 18.9 km/liter|  |  |  |  |
Mileage| 13.6 km/liter| 14.2 km/liter| 14.5 km/liter|
Seating Capacity | 5 Person| 4 Person| 5 Person|
Driver air bags| N| N| N|
Child Safety Locks| Y| N| Y|
Air Conditioner| Y| Y| Y|
Tachometer| Y| N| N|
Front Fog Lights| Y| N| N|
Central Locking| N| N| N|
Engine Type| 475 IDI with
Microprocessor based
Engine Management System
(ECU) | In-Line Engine| FC engine|
Displacement| 1405 cc| 796 cc| 796 cc|
Power | 54PS @5500rpm| 37.5@5,000 (PS@rpm)| 47@6,200 (PS@rpm)| Torque| 83Nm @2500rpm| 6@2,500 (kgm@rpm)| 6.32@3,000 (kgm@rpm)| Gear/speeds| 5| 4| 5|
Front suspension| Independent, Wish Bone
type, with McPherson
strut, Anti-roll Bar | McPherson strut & coil
spring | McPherson Strut with
torsion type roll control
device |
Rear Suspension| Independent, Semi
trailing arm with coil
spring | Coil spring| Coil spring with three
link rigid axle &
isolated trailing arms|
Steering type| Rack and pinion| Manual| Manual|
Front Brakes| Ventilated Discs| Disc| Disc|
Source: Gaadi.com accessed on 8th Dec 2010
Market Shares of major Manufacturers
Passenger Vehicles
(PVS)| From April-November 04-05| From April-November 05-06| Total Market Share (in %)| The Net Change between the period (in %) | Total number of exports in April 05-06|
 |  |  |  |  |  |
Maruti Udyog| 269,360| 2,91,182| 52.2| 8.1| 23,043|
Hyundai Motors India Limited| 89,075| 1,07, 066| 19.2| 20.2| 68,374| Tata Motors| 95,402| 24,348| 16.6| -2.7| 12,105|
Honda Siel Cars India Ltd| 23,186| 24,348| 4.4| 5.1| 31| Ford India Pvt. Ltd.| 15,026| 10,512| 1.9| -30%| 9,928| Source: automobile India accessed on 8th...
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