Table of Contents

1. COMPANY BACKGROUND ................................................................................................................... 2

2. INTRODUCTION TO TATA NANO ......................................................................................................... 2
3. PROJECT DETAILS ................................................................................................................................ 3
3.1 The Manufacturing Plan ................................................................................................................ 3
3.2 Location Detail .............................................................................................................................. 3
3.3 Suppliers........................................................................................................................................ 4
3.4 Cost and financing ........................................................................................................................ 6
3.4.1 The Revenue Model ............................................................................................................... 9
4. Market and Demand Analysis ........................................................................................................... 10
4.1 Demand Analysis ......................................................................................................................... 10
4.2 The Marketing Plan ..................................................................................................................... 11
5. TATA NANO SALES and DISTRIBUTION STRATEGY ............................................................................ 15
6. INDUSTRY ANALYSIS.......................................................................................................................... 19
6.1 Introduction ................................................................................................................................ 19
6.2 Market size .................................................................................................................................. 20
6.3 Investments................................................................................................................................. 20
6.4 Government Initiatives ............................................................................................................... 21
7. PEERS................................................................................................................................................. 22
7.1 AT NATIONAL LEVEL .................................................................................................................... 22
7.2 AT INTERNATIONAL LEVEL ......................................................................................................... 22
7.3 How TATA NANO was different from its Competitors? .............................................................. 23
8. SWOT ANALYSIS ................................................................................................................................ 26
9. BCG MATRIX ...................................................................................................................................... 26
10. Technical Analysis ........................................................................................................................... 27
11. Cheapest Car ................................................................................................................................... 29
12.Other Factors ................................................................................................................................... 34

1. COMPANY BACKGROUND
Tata Motors Limited is Indias largest automobile company, with consolidated
revenues of INR 2,32,834 crores (USD 38.9 billion) in 2013-14. It is the leader in
commercial vehicles in each segment, and among the top in passenger vehicles
with winning products in the compact, midsize car and utility vehicle segments.
It is also the world's fifth largest truck manufacturer and fourth largest bus
manufacturer.

The Tata Motors Groups over 60,000 employees are guided by the mission to
be passionate in anticipating and providing the best vehicles and experiences
that excite our customers globally.''

Established in 1945, Tata Motors presence cuts across the length and breadth
of India. Over 8 million Tata vehicles ply on Indian roads, since the first rolled
out in 1954. The companys manufacturing base in India is spread across
Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh),
Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka).
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 power trains. The companys dealership, sales,
services and spare parts network comprises over 6,600 touch points, across
the world.

2. INTRODUCTION TO TATA NANO

The Tata Nano is a rear-engine, 3 meters long, four-passenger city car built by
Tata Motors, aimed primarily at the Indian market. The car is very fuel
efficient, achieving around 26 kilometers per liter on the highway and around
22 kilometers per liter in the city. The car has a price tag of just Rs 1 lakh the
same price as the DVD player in a Lexus. Hence making it easily affordable for a
middle class family. Tata Nano is a dream come true for an average Indian.
Now the medium class people can also have and enjoy the ride of four
wheeler.

The car has achieved its low price by minimizing cost on unnecessary luxuries,
the basic Nano comes without front and rear fog lights, without a heater or air
conditioning, without anti-lock brakes, only one single windscreen wiper,
manually operated windows, manual steering with no air bags, tiny 12
wheels, plastic body parts joined with adhesive instead of more conventional
metal and welding.
In addition, Tata has come up with practical ways to reduce car weight and
thereby trim down the overall cost. It uses comparatively small and light
engine, a 623cc two-cylinder petrol engine made of aluminum, unlike
conventional engines which are made out of cast iron. The engine of Tata Nano
is strategically placed at the back of the car leaving the front section for
luggage, that too with the capacity of a briefcase. This is the most significant
element in bringing down the weight and the overall cost of the car. Other
factors that contribute towards the weight reduction are the usage of hollow
steering wheel shafts, plastic body panels and smaller tubeless tires. As a result
of these measures, Tata Nano weighs only about 590kg. Lesser weight and
fewer parts mean less raw material and lower cost for Tata Nano. The
manufacturers of the TATA Nano Car are aiming to provide an affordable mode
of transport to their initial target market of lower income families in India.

3. PROJECT DETAILS
3.1 The Manufacturing Plan
To achieve its design goals, Tata refined the manufacturing process,
emphasized innovation and sought new design approaches from suppliers.
Many components of the Nano are made in Germany by Bosch, such as Fuel
Injection, brake system, Value Motronic ECU, ABS and other technologies.

3.2 Location Detail

The Nano was originally to have been manufactured at a new factory in:
Singur (census town, less than 5000 people, 75% working men on nonagricultures, and 400km2/citizen),
West Bengal (state in eastern of India, with 3rd fastest growing economy in
India, best power infrastructure, includes Kolkata city), but increasingly violent

protests forced Tata to pull out October 2008. Currently, Tata Motors is
reportedly manufacturing Nano at its existing plant in:
Pantnagar (town and university campus)
Uttarakhand (state in northen of india, policies for generous tax benefits for
investors) and a mother plant has been proposed for: Sanand Gujarat (largest
business in india, 1st nationwide gas-based thermal electricity)
The company will bank on existing dealer network for Nano initially. The new
Nano Plant could have a capacity of 500,000 units, compared to 300,000 for
Singur. Gujarat has also agreed to match all the incentives offered by West
Bengal government.

3.3 Suppliers

Supplier[26]

Part/system[26]

Texspin

Clutch Bearings

Bosch

Oxygen sensor, Gasoline injection system

(diesel will follow), starter, alternator,
brake system

Continental AG

Gasoline fuel supply system, fuel level

sensor

Caparo

Inner structural panels

HSI AUTO

Static sealing systems (Weather Strips)

Delphi

Instrument cluster

Rane Madras Limited

Steering Assembly

Denso

Windshield wiper system (single motor

and arm)

FAG Kugelfischer

Rear-wheel bearing

Federal-Mogul

Pistons, Piston rings, Spark plugs,

Gaskets, Systems protection

Ficosa

Rear-view mirrors, interior mirrors, manual

and CVT shifters, washer system

Freudenberg

Engine sealing

GKN

Driveshafts

INA

Shifting elements

ITW Deltar

Outside and inside door handles

Johnson Controls

Seating

Mahle

Camshafts, spin-on oil filters, fuel filters

and air cleaners

Saint-Gobain

Glass

TRW

Brake system

Ceekay Daikin/Valeo

Clutch sets

Vibracoustic

Engine mounts

Visteon

Air induction system

ZF Friedrichshafen AG

Chassis components, including tie rods

Behr

HVAC for the luxury version

Drr

Lean Paint Shop

3.4 Cost and financing

The Financial Plan
n Investment funding is needed for capital expenses and operating expenses as
can be observed by the following financial statements:

Statement of Profit & Loss

Particulars
Sales
Cost Of Goods Sold
Gross Profit
Sales, General & admin expense
PBDIT
Depreciation & Amortization
PBIT
Interest
PBT
Tax (@30%)
PAT

FY10
20000
17240
2760
1900
860
940
-80
0
-80
0
-80

FY11
46414
38337.96
8076.036
3527.464
4548.572
2135.044
2413.528
1113.936
1299.592
389.8776
909.7144

FY12
49113
40911.13
8201.871
3634.362
4567.509
2062.746
2504.763
884.034
1620.729
486.2187
1134.51

FY13
35485
29275.13
6209.875
3122.68
3087.195
1809.735
1277.46
674.215
603.245
180.9735
422.2715

FY14
13924
11208.82
2715.18
1294.932
1420.248
821.516
598.732
278.48
320.252
96.0756
224.1764

All type of cost from COGS to financial cost are taken on percentage to Sales
revenue basis. Data of percentage to sales revenue is taken from annual report
of Tata Motors as Tata Nano is one of its product.
Cost Sheet
Particulars
FY10
Cost Of Goods Sold
86.20%
Sales, General & Admin
9.50%
Expense
Depreciation & Amortization
4.70%
Interest
0
*86.2% of Sales revenue is cost of goods
taken.

FY11
82.60%
7.60%

FY12 FY13
83.30% 82.50%
7.40% 8.80%

FY14
80.50%
9.30%

4.60%
4.20% 5.10%
5.90%
2.40%
1.80% 1.90%
2%
sold, similarly all other cost are

Balance Sheet
Particulars
Liabilities
Non-Current Liabilities
Long Term Debt
Other Long term Liability
Current Liabilities
Accounts Payables
Total
Assets
Non-Current Asset
Tangible Asset
Investments
Current Asset
Accounts Receivable
Inventory
Cash at Bank
Total

FY10

FY11

FY12

FY13

FY14

0
3000

150
4620

225
6136

337.5
7823

506.25
9718

5000
8000

4500
9270

4050
10411

3645
11806

3280.5
13505

1000
1000

1200
1000

1440
750

1728
500

2073.6
250

3500
2500
0
8000

4200
2750
120
9270

5040
3025
156
10411

6048
3327.5
202.8
11806

7257.6
3660.25
263.64
13505

Criteria for Investment Judgment

Two criteria for judgment are:
Net Present Value of TATA NANO Project
Internal Rate of Return
Net Present Value of TATA NANO Project
It is defined as present value of benefits minus present value of cost.
NPV of Tata Nano Project is evaluated using Free Cash Flow
discounting. In NPV cost of capital is used as a discounting rate to reach
to projects present value. Initial investment in the project is of Rs 1000
crores.

Ct = net free cash flow during the period

Co= initial investment
r = discount rate, and
t = number of time periods

In auto industry on an average basis the Weighted Average Cost of Capital is

7.6%, so discounting rate (r) is 7.6%.
FY10
FY11
FY12
FY13
FY14
PAT
-80
909.7144
1134.5
422.2
224.1
Interest(1-Tax)
0
779.7
618.8
471.9
194.9
Depreciation
940
2135.044
2062.7
1809.7
821.5
Change in Working
1000
1570
1601
1762.3
1967.7
Capital
Capex
1000
1000
750
500
250
Free Cash Flow
-1140
1254.5
1465.08
441.06
-977.06
Discounted FCF
-647.7
405
268.7
46.02
57.8
Present Value of
14.17
Benefit
Present Value of
1000
Cost
Net Present Value
-985.83

Internal Rate of Return

The discount rate often used in capital budgeting that makes the net present
value of all cash flows from a particular project equal to zero.IRR is sometimes
referred to as "economic rate of return (ERR)."
Discounting Rate = 1.7%

FY10

Initial Investment
Discounted value of
FCF
Present Value of
Benefits
Net Present Value

FY11

FY12
1000
-1120.94 1212.924 1392.831

FY13

FY14

412.8586 -898.084

1000
0

3.4.1 The Revenue Model

The way Tata Nano raise funds include several aspects. Those aspects are
detailed in the as follows.
Selling the cars to clients
This activity is the first revenue flow of the project. The first targeted market is
the Indian one. The cars deliveries have started in July 2009. There are also
project to extend the market to Malaysia, the rest of Asia, Europe, Africa and
south America, starting in 2011.
Bank Services
Tata Nano have sign contract with Indian Banks in order to allow low income
people to get loans at low interests. Therefore, they could afford booking for
their Tata Nano. In that contract, Tata Nano and the bank all take advantages.
Maintenance Services
The Tata Nano project include a maintenance department. In fact, the
customers will be offered maintenance services at a fix price per month. Those
services will be extremely competitive and cheap as the car itself.
Advertising
Tata nano have been making a lot of advertisement in a lot of countries. As
Tata Nano have become a famous trade, some channel will allow Tata Nano
advertisement to be displayed, increasing the channel audience. In addition,
Tata Motors will take advantage of sweepstakes organized in order to

promote the car. Those events always bring to the company both publicity
and money.
Merchandising
There are a lot of product that have been manufactured in order to promote
the Tata Nano, namely hats and cups. The company will therefore sell those
product and make money benefits from them.
Making franchises
The development of Tata Nano started 6 years ago and have lead to the
production of an extremely efficient car as far as pollution and gas
consumption are concerned . The technology used could be sold to other
companies as Licenses, leading to funds raise.
Distributors In addition, Tata Nano have planned to use Distributors to make
its product easily available to the Indian population. Therefore those
distributors will pay royalties to Tata Nano after selling each car.

4. Market and Demand Analysis

4.1 Demand Analysis
Tata Nanos launch could expand the Indian car market by 65%, according to
rating agency CRISIL. The low price makes the car affordable for families with
incomes of 1,500 Euro (Rs. 100,000) per annum, the agency said. The increase
in the market is expected to push up car sales by 20% over the previous year.
The unveiling of Tata Nano, the cheapest car in the world, triggers an
important event in the car market. Based on the statement by company
officials, CRISIL Research estimates the consumer price of the car at around
1,900 Euro (Rs. 130,000). This brings down the cost of ownership of an entry
level car in India by 30%.
The Indian mass who has dreamt of buying a car can enjoy the launch as it is
now affordable to most middle class families. According to a rough estimate
the average income of middle class has gone up in recent years. Currently the

Indian economy is expanding at the rate of 9% which is second fastest growing

economy in the world after china and per capita income has increase two fold
in past 10 years.. This has perhaps left more disposable income in the hands of
Indian consumers. The banks providing various types of loans and credit
facilities are also a major reason for consumerism. So the launch is, overall
beneficial for Indian consumers and the economy.
Keeping in mind that the Tata Nano was envisioned as the four wheelers for
those who can only afford two wheelers, due to its affordable price Nano's
impact on two wheelers sales has been widely debated, Nano will also affect
sales of higher priced Cars or will motivate competitors to reduce the prices
resulting lowered margins for rest of the industry.
As the Nano was conceived and designed around introducing the automobile
to a sector of the population who are currently using eco-friendly bicycles and
motorcycles, environmentalists are concerned that its extraordinarily low price
might lead to mass motorization in countries like India and therefore possibly
aggravate pollution as well as increase the demand for oil. The ecology focused
German newspaper Die Tageszeitung feels that such concerns are
"inappropriate" as the Tata Nano has lower emissions compared to the
average Volkswagen, and that developing countries shouldn't be denied the
right to motorized mobility when industrialized countries should be looking to
reduce their emissions and usage of cars. Die Walts reports that the car
conforms with environmental protection, and will have the lowest emissions in
India.

4.2 The Marketing Plan

The Marketing Strategy:
This section discusses the different aspects of the marketing strategy adapted
by TATA for their NANO car.
The Peoples car:
Well before the car is launched, TATA-NANO was already with the people of
India by its logo called the peoples car. This is how it all started, the
advertisement for the people of India : Can one buy a car with 1-lakh rupees,
yes we can in couple of years. This advertisement made a huge impression on

the automobile market, as almost the whole middle class of India started
dreaming of their own car. This should be considered in the view that in India,
the average car price was 3 to 4 times greater than what Tata offered. Also the
fact that rupees 100 K was affordable compared to 300 K or 400 K rupees. This
soon became a discussion point in India. So instead of providing the
advertisement at the launch of new idea or product, nano was the lucky to get
the free publicity thanks to the hype that was created by the first move made
by TATA.
The Buzz
As stated above, once it became the discussion point in a country of
population of 1 billion, TATA has no worries of marketing for some time. The
TV channels, the automobile industry experts, the investors, the people who
not; every one discussing Is it really possible. This first advertisement was a
huge success, and it perhaps decreased the marketing cost of TATA. In fact,
people started asking the question, when can we buy the car. The buzz in the
market, tata nano
Auto Exposition 2007
The first introduction of the nano with the public was made in the auto
exposition in2007 in home country in Delhi. There had been discussion in the
market that, Is it really possible. The answer was the display of the prototype
of the car. Now this at once ended few of the rumors in the market; and the
attention was switched to technical details of the car. So the exposition proved
to be the first grand success point in the marketing of the nano car, if the first
advertisement is considered as the buzz. The situation turned out, Yes, it is
possible.
Across the borders
It was the time to show the world, that not only the high-tech cars are the best
sellers in the market but there are people who are looking for the cheapest car
on earth by a big margin. The car was in 78-th Geneva Motor Show 2008. This
helped to make the image of car as a good working replacement to the existing
ones back home in India. The participation in the Motor shows was widely
discussed inside and outside India helping the TATA experts to better
understand, where did they stand to the worlds expectation and what are the
things to be done. This also changed the face of the Indian automobile industry

in the world, and now people were amazed with the fact sheet of the NANO
car.
Tata Motor Showrooms
The nationwide motorshows were organized by TATA to bring the whole class
of society to the shows that they have never attended in their lives rather most
of them never thought of going to such a show. The car became a need as
compared to a luxury before.
On The web
Considering the needs of the 21 st century, the website was launched in the
beginning. The website is quite comprehensive yet it provides all the answers
to the questions being asked since the start of the project. The marketing team
has also put a good effort to keep the website simple and easy to use and
understand, it was really a vital requirement considering the intended users /
buyers of the product. Just to make a point, that how necessary and successful
the website and the car itself are more than 50 Million hits in the first year.
Now one can find the nano on facebook, orkut and twitter.

The One Form Booking

TATA has been successful in this important aspect of the selling by the virtue of
some good marketing of the booking of the car. Since there are millions of the
interested buyers of the product, a transparent and easy booking procedure
was required to keep the faith of customers in TATA. The hype is so much that
TATA cant provide the demand for the next many years, so the booking
process became a focal discussion point in the market. TATA chose the Internet
booking as well as the booking by the agents. In any case, the intended buyer is
to fill one single form. The lucky buyers are chosen by a random draw, so
NANO is popular, isnt it.
Bank Financing
TATA is keeping its promise of peoples car by providing bank car financing.
Despite the fact that NANO has more customers than the production line can
produce in next few years at the moment, NANO decided to make the way for
the people who cant afford to pay the price with the booking of the car. The
15 major banks including the state bank of India have been signed with the
TATA to finance the low income people. Now how much one has to pay for

booking a car, its beyond your imagination hold your seat, its 3000 Indian
Rupees that makes around 50 Euros . Not kidding. Now how does this come
into the marketing strategy of the NANO, in fact TATA has closed the doors for
any competitor by not letting go any one in the India who dreams of a personal
car and cant get it. The customer loyalty is to grow with such moves, specially
when TATA has so many buyers at the moment.
Key Marketing Features
Apart from the buzz, the financing issue etc. there has been some more serious
work as well. The TATA is advertising some of the features of the NANO that
make it comfortable, usable and not only affordable. Some of the features are
discussed here: The low maintenance is a key issue, one can buy a car or get
bank finance but One has to maintain the car by oneself in a country where
insurances are high. The low maintenance makes NANO an automatic choice
for the ones who even normally travel on motorcycles. The small size of the
car gives a big advantage of parking in the urban India, where its getting hard
to find the places round the clock.
NANO is not only cheap, its so cheap when it comes to the fuel consumption .
The fuel consumption is far better than the 1000 cc cars which are normally
used by the low income Indians.
The NANO is environmental friendly as well, and fulfills all the requirements of
the international and national laws.
The Cheapest is the tag that one cant take from NANO for few coming years.
The stylish, the car doesnt look like a rickshaw (a local transport), its not that
far away from the stylish 100 times expensive cars.
The wide color range provides the choice a colorful India needs, without this
forget about selling much.
A promise is a promise
Here we go; the car was finally launched in the market with the said logo. The
promise has been made. The launch is nationwide, so NANO will be seen
throughout the country, and will find itself in 1.2 Billion people.

Warranty

TATA is providing a 18 months Or 24 K Kilometers warranty, it cant be

considered as very good compared to what one gets at the international level
but it is still not bad and it sounds good once it is considered in a global
package of price, use, fuel consumption etc etc.

The NANO brand

Nano has itself become a brand now, and one can find the nano phone, nano
watch. The products are available on and offline. These products have of
course added to the popularization of already well known Nano.
The future
Nano will not be limited to India, the international marketing has started. The
advertisements for Malaysia are already underway and an early launch is
expected while the NANO Europa launch is expected in 2012.

5. TATA NANO SALES and DISTRIBUTION STRATEGY

DISTRIBUTION TATA NANO is using Hub and Spoke Model for distribution TATA
has many C&F Agents (Collects Nano from hubs and distribute it across nation)

Big Bazaar Driving Tata Nano Sales

In February 2011, automotive major Tata Motors tied up with retail
conglomerate Future Group to sell its low-priced car, the Tata Nano (Nano),
through the Future Groups consumer retail outlet Big Bazaar. The
partnership was a first-of-its-kind distribution strategy in the country wherein a
car was being retailed through a super store. The Nano was displayed at 120
Big Bazaar outlets across India. Prospective buyers booking the Nano at a Big
Bazaar outlet received gifts such as gold coins and vouchers worth Rs.1,500.
Talking about the initiative, Sandip Tarkas (Tarkas), Customer Strategy
president at Future Group, said, There is a lot of commonality between Big
Bazaar consumers and prospective Nano buyers. Big Bazaar as a concept
appeals to the masses and with over 150 million footfalls every year, we are
trying to see how we can sell Nano, which has a similar positioning.
Big Bazaar, one of the biggest retail chains in India, is run by the Future Group.
As of April 2011, there were about 148 outlets across 80 cities in India with the
number increasing significantly every year. It was reported that more than 150
million people shopped at Big Bazaar every year.
Available at a price of US$ 2900, the Nano was the cheapest car in the world
and was manufactured by Tata Motors. The brainchild of Tata Group
chairman, Ratan Tata, the Nano was launched in the year 2009. Nicknamed as
The Peoples Car, the Nano was basically targeted at the price conscious
lower- and middle-class segment in India. It ran on a 623-cc 2-cylinder engine
with about 30 horsepower. The Nano was promoted as a low-priced, fuelefficient small car suitable for Indian roads. However, the initial problem for
the Tata Nano was being forced to shift its production plant from West Bengal
on the east of India to Gujarat in the west. Despite the delay in production, the
response for the car was good as Tata Motors registered over 0.2 million
bookings for the Nano, receiving about US$ 25 billion within two months of its
launch. Initially, the Nano was sold through an open sales method which
followed the pay first, drive later booking policy.
However, in 2010, sales of the Nano began to drop due to frequently reported
fire accidents and other manufacturing and delivery problems. In November
2010, Nano sales were as low as 509 units, the lowest for the car since its
launch. Some experts felt that the distribution strategy for the Nano had failed
to attract the target customers who were reluctant to walk into large Tata

Motors showrooms. According to them, Nano customers were typically middle

class, price conscious people who were not used to exploring options for their
purchases.
To prevent a further slide in sales, Ratan Tata formed a ten-member crack
team led by company executives R Ramakrishnan (Vice-President of
Commercial, Passenger Car Business Unit) and Girish Wagh (Vice President and
Head of Small Car Project) who came up with a new distribution system for the
Nano. The team formulated a unique product positioning plan to promote the
Nano. As part of the revamped strategy, Tata Motors decided to sell the Nano
off the shelves through its sales outlets and kiosks across India, instead of
following the earlier system of having to book and wait for delivery. The
company also decided to tie up with Future Group to sell the Nano through Big
Bazaar outlets (Refer to Exhibit I for image related to the tie-up). The company
said it specifically chose Big Bazaar to sell the Nano as it was one of the biggest
retail chains and had massive reach among Indian households. Moreover,
experts felt that Big Bazaars customers directly fit the profile of prospective
Nano buyers who basically looked for Value for Money. Commenting on the
companys decision to partner with Future Group, Research Head of IDBI
Securities, Sonam Udasi, said, Tata Motors may have now realized that for a
product like Nano, conventional distribution system such as car showrooms
can only help to an extent. Big Bazaars customers, mostly value conscious
people, will directly fit in the profile of Nano buyers.
Experts felt that the partnership with Big Bazaar would help Tata Motors
attract more customers and drive Nano sales. Moreover, the Nano fit in well
with Big Bazaars theme of giving the customer the maximum at the lowest
price available, they said. Some analysts said the move would help the car gain
adequate exposure as a number of people from different walks of life shopped
at Big Bazaar everyday. On the other hand, for Big Bazaar, it was an
opportunity to explore its business and add another product to its wide range
of offerings.
The new unconventional distribution system was reported to have met the
expectations of both Tata Motors as well as Future Group and contributed to
Nano sales. In February 2011, Tata Motors sold around 450 Nano cars through
the initiative, more than 5% of the 8,262 Nano cars sold in that month in India.
In the same month, the Nano featured in the top ten selling cars in India after a
gap of five months. Total sales volume reached 10,000 units in April 2011, the
highest monthly sales since the car hit the roads in July 2009 (Refer to Exhibit II
for sales of Nano). Though initially, Tata Motors was to sell the Nano at Big

Bazaar for a period of three months, it decided to extend the period by

another three months after looking at the improved sales figures. There is a
Nano parked in every Big Bazaar outlet and the touch and feel experience has
accelerated decision-making, especially in smaller towns. This has contributed
to Nano sales in a big way, said Tarkas.
However some experts were sceptical about this move, saying that Indians as
such were not yet ready to buy a car off the shelf. Buying a car was much
more than just buying a commodity and unlike grocery items, people
purchased them after much diligence, they said.

PRESENT ISSUES WITH DISTRIBUTION STRATEGY

While the Nano seemed tailor-made for rural drivers, Tata only has dealers in
Lack of dealersmajor cities. While thein the target market i.e. semi urban
cities and rural areas. Nano seemed tailor-made for rural drivers, Tata only has
dealers in major cities. The cars reputation was further damaged when five of
the first 30,000 cars had engine fires. Although no one was hurt in these
instances, two of the cars burnt to the The final nail in the coffin is the price:
Rising materialground. costs pushed the cars price up to Rs. 1.5 lakh the
same as a used Maruti 800. Even without the social stigma, this price left many
people wondering why they would choose to buy a car that didnt even have a
trunk

6. INDUSTRY ANALYSIS
6.1 Introduction
The Indian automobile sector is one of its most vibrant industries. The industry
accounts for 22 per cent of the country's manufacturing gross domestic
product (GDP). It comprises passenger cars, two-wheelers, three-wheelers and
commercial vehicles and is currently the seventh-largest in the world with an
average annual production of 17.5 million vehicles, of which 2.3 million are
exported. The Indian auto market has the potential to dominate the global
auto industry, provided a conducive environment is created for potential
innovators to come up with new pilot projects.
The next few years are projected to show solid but cautious growth due to
improved affordability, rising incomes and untapped markets. All these open
up an opportunity for automobile manufactures in India. In addition, with the
government's backing and a special focus on exports of small cars, multi-utility
vehicles (MUVs), two and three-wheelers and auto components, the
automotive sector's contribution to the GDP is expected to double, reaching a
turnover of US$ 145 billion in 2016, according to the Automotive Mission Plan
(AMP) 2006-2016.

6.2 Market size

The automobile industry produced a total of 1,861,849 vehicles including
passenger vehicles, commercial vehicles, three-wheelers and two-wheelers in
April 2014 as against 1,687,243 in April 2013, registering a growth of 10.35
percent over the corresponding month of 2013. The growth is mostly
attributed to the rise in two-wheeler production.
Two-wheeler sales registered growth of 11.67 percent in April 2014 over April
2013. Within this segment,scooters, motorcycles and mopeds grew by 26.08
percent, 8.06 percent and 0.23 percent respectively.
In April 2014, passenger car sales stood at 1,786,899 units while utility vehicles
sales stood at 525,942 units, as per data from Society of Indian Mobile
Manufacturers (SIAM). Export of utility vehicles showed an improvement of
298 percent with 41,550 units.
Tractor sales in the country will grow at a compound annual growth rate
(CAGR) of 8-9 per cent in the next five years making India a high-potential
market for international brands such as Kubota, Case New Holland, AGCO,
Same DeutzFahr and John Deere, according to JD Power Asia Pacific's maiden
pilot study on the Indian tractor market.
The cumulative foreign direct investment (FDI) inflows into the Indian
automobile industry during the period April 2000 -May 2014 was recorded at
US$ 9,885.21 million, according to data published by Department of Industrial
Policy and Promotion (DIPP).

6.3 Investments
Some of the recent major investments in the automobile industry in India are
as follows:
BMW Group has launched the third generation of its sports utility
vehicle (SUV), the X5 xDrive30d, which will be Rs 1 million (US$
16,635.94) cheaper than the previous version, as the model will now be
assembled at the company's Chennai plant rather than being imported
fully assembled.
Japan's Isuzu Motors aims to sell 50,000 pickup vehicles in India in the
next few years to gain market leadership. The company, which has a
fully owned subsidiary in Chennai, has earmarked Rs 3,000 crore (US$
499.07 million) for a 120,000 units per year manufacturing facility.

Mercedez-Benz India has inaugurated South India's first AMG

Performance Centre at Sundaram Motors in Bengaluru and has also
launched the ML 63 AMG for the Indian market. Mercedes-AMG aims to
offer a more personalised service to its customers and further bolster its
powerful luxury SUV product portfolio in India.
VE Commercial Vehicle, a joint venture (JV) between Eicher Ltd and
Volvo, is exploring the possibility of entering the small commercial
vehicle segment with a range of mini trucks. With this move, they plan
to enter the market with bigger rivalssuch as Tata Motors, Mahindra and
Mahindra and Ashok Leyland.
Fiat plans to launch 12 models based on three platforms, double its
workforce to 5,000 and increase capacity by 80 per cent at its
Ranjangaon plant by 2018.
Mahindra & Mahindra (M&M) has inaugurated a factory and a research
centre for electric two-wheelers in Ann Arbor, Michigan, US. With an
initial capacity to produce 9,000 vehicles annually, the plant will
assemble its first electric two-wheeler later this year.

6.4 Government Initiatives

SIAM and the Automotive Component Manufacturers Association of India
(ACMA) are two apex bodies appointed by the Government of India to work for
the development of the automobile industry in India.
India has a well-established Regulatory Framework under the Ministry of
Shipping, Road Transport and Highways in which SIAM plays an important role.
Also, ACMA's active involvement in trade promotion, upgrade in technology,
quality enhancement and collection and dissemination of information has
made the body a vital catalyst for the industry's development.
The Indian government encourages foreign investment in the automobile
sector and allows 100 per cent FDI under the automatic route. It is a fully
delicensed industry and free imports of automotive components are allowed.
Moreover, the government has not laid down any minimum investment
criteria for the automobile industry and has formulated the Automotive
Mission Plan for the period 2006-2016 which aims to accelerate and sustain
growth in this sector. The plan also aims to double the contribution of the
automotive sector to the country's GDP by taking its turnover to US$ 145
billion and providing additional employment to 25 million people by 2016.

7. PEERS
7.1 AT NATIONAL LEVEL
The closest competitor of the upcoming "Nano Car" is Maruti 800 which is
double of its price. a small car from Maruti Suzuki, which is priced higher than
Tata Nano. Despite six percent shorter, Tata nano has about twenty one
percent more interior space than the Maruti 800 due to its larger height and
width. Suzuki is aware of the gap and is working arduously to improve its
current care lineup. It will focus on achieving the practicality and efficiency of
Tata Nano without compromising on safety and quality. However, Maruti
Suzuki is not in a position to reduce the price of Maruti 800 just for the sake of
competing with Tata Nano.
Bajaj auto is also developing a low cost car (code-named ULC) tagged at 2,000
Euro together with Renault-Nissan to rival Tata Nano. This ultra-low cost car is
expected to be launched in India in 2012. The companies claim that the new
ULC car will consume less fuel than any other four-wheeler on the urban roads.
Thus the car is expected to take on the Tata Nano, the cheapest car being
produced and marketed by Tata Motors in the country.

7.2 AT INTERNATIONAL LEVEL

The Toyota IQ could be a competitor of TATA Nano at international level
because it is the worlds smallest four seater car. Though the car is a small car
since it gives the feel of a large car since it has the power of a Toyota. But the
Nanos price and design is much better than the Toyota IQ.
Another car that could be a competitor will be Mitsubishi I. But there again
people may opt for the nano because of the mileage it provides if people are
looking for a fuel efficient car in that category. The toyota aygo super mini
could also compete with this car.
China's Cherry QQ could also be considered as a strong competitor who is
expected to gain foothold in the Indian market in 2008. The Cherry is expected
to retail about 2,600 Euro. But when compared to any of these above
mentioned international models the Tata Nano europa model stands out.

Hyundai is another company taking Tata Nano seriously. Hyundai plans to

launch a new model in the market which would be priced cheaper than their
current cheapest model- Santro. This new car would not be released at least
until 2011, and is expected to be manufactured in Hyundai's new factory.
Honda and Toyota are leading the way on so called cleaner gasoline-electric
hybrids, and some environmentalists argue getting prices down on these
technologies is where efforts should be concentrated. Inexpensive and ecofriendly electric-cars like Tara Tiny, Oreva Super (both reportedly even cheaper
than Tata Nano) and REVA pose even more significant danger to Nano.
The design, mileage, space efficiency, maneuverability of the tata nano europa
is better when compared to the others. Also in terms of being less pollutive the
tata nano europa is a very environment friendly car. May be it could be found a
bit lacking in power and the top speed. But tata nano europa is set to take
entire europe and the rest of the world by storm and is sure to give its
competitors a run for their money.

7.3 How TATA NANO was different from its Competitors?

Key Benefits to the Customers
AFFORDABLE Tato Nano is priced around 1 Lakh rupees or 2, 000 Euro. This
price tag is almost half the price of the current cheapest car in India , Maruti
Suzuki 800 , which is priced around 2 Lakhs. Tata Nano is ideal for two-wheeler
owners looking forward to switch to 4 wheelers. Its also suitable for women,
who would find driving a car safer than driving a scooter.
FUEL EFFICIENT Tata Nano has a mileage of 21.97 kilometer per liter, under
city road conditions, and 25.97 km/L on highways. This makes Tata Nano a fuel
efficient vehicle, which will save money in the long-term. This mileage comes
with a powerful engine of 623 cc with a maximum speed of 105 Kilometers per
hour
SAFE Tata nano has gone through the full frontal crash test according to the
standard norms. Although it is 8% smaller than Maruti 800 (the current
cheapest car in India), its 21% more spacious. It is a 5-seater, with an ability to
carry heavy loads. According to Autocar India, though Tata Nano weighs a
mere 600 kg, its robust and well-screwed together.

ENVIRONEMENT FRIENDLY If you think Tata Nano would increase pollution,

think again. Tata Nano emits less carbon than two-wheelers. It also meets
emission norms of BS II, III, IV
which are Euro II, II, IV equivalent.
RELAIBLE AS COMPARED TO OTHER TRANSPORT WAYS Tata Nano is much
better than most of the other transport ways. In comparison to taxis in india it
is much cheaper and good at looks. In comparison to rickshaw it is
comfortable. It's also better with environment and speed if we compare to
rickshaw. It's also cheaper in comparison to rickshaw. Saves lot of energy
which with taxis and rickshaws is completely wasted.In comparison to rickshaw
at least NANO will protect in rains

8. SWOT ANALYSIS

9. BCG MATRIX

The above figure shows that Market Share of Tata Nano is low, however the
market growth rate of Nano is high.

10. Technical Analysis

Engine:

2 cylinder petrol with Bosch multi-point fuel

injection (single injector) all aluminium 38 metric
horsepower (28 kW) 624 cc (38 cu in)
Value Motronic engine management platformfrom Robert
Bosch GmbH
2 valves per cylinder overhead camshaft
Compression ratio: 9.5:1
bore stroke: 73.5 mm (2.9 in) 73.5 mm (2.9 in)
Power: 38 PS (28 kW; 37 hp) @ 5500 +/-500rpm[3]
Torque: 51 Nm (38 ftlbf) @ 3000 +/-500 rpm

Layout and
Rear wheel drive
Transmission
4-speed manual transmission
Steering

mechanical rack and pinion w/o servo

Turning radius: 4 metres[3]

Performance Acceleration: 0-60 km/h (37 mph): 8 seconds[3]

Maximum speed: 105 km/h (65 mph)[3]

Fuel efficiency (overall): 25.35 kilometres per litre (4.24
litres per 100 kilometres (66.6 mpg-imp; 55.5 mpg-US))
Body and
dimensions

Seat belt: 4[23]

Trunk capacity: 150 L (5.3 cu ft)[24]

Suspension, Front brake: 180 mm drum[3]

Tires &
Brakes
Rear brake: 180 mm drum[3]
Front track: 1,325 mm (52.2 in)[3]
Rear track: 1,315 mm (51.8 in)[3]
Ground clearance: 180 mm (7.1 in)[3]
Front suspension: McPherson strut with lower A arm
Rear suspension: Independent coil spring
12-inch wheels[25]

11. Cheapest Car

Consumers are familiar with the price of electronic products falling, whether it
is digital cameras, wide-screen televisions or DVD playersand even passenger
cars have reduced in price in real terms over the past decade.
But Januarys launch in India of the Tata Nano car, priced at just 100000 rupees
(around E1720), has come as a shock to many people.
Everyone appreciates that labour costs are lower in India than in Europe, but
material costs are similar. How can a car cost less than we are used to paying
for good quality motor scooters here in Europe?
When the Nano was unveiled the senior managers from Tata made it clear that
this is a proper four-door family car, not a motorised quadricycle or fourwheeled moped. Given that the two-seater Smart Fortwo costs around E9000,
it is worth taking a closer look at the Nano to see how it has been designed so
as to achieve such a low showroom price.
First, however, Tata acknowledges that there is really no profit margin on the
base model; profits will come from customers specifying the deluxe models
with air conditioning, electric windows, colour-coded bumpers and other
options. And this highlights one way in which the Nano costs have been held
down the standard model is very basic by modern standards. Nonetheless,
care has been taken to ensure that the car has adequate performance, meets
current emissions standards (EuroIV), is fuel-efficient (20km/litre) and is safe
thanks to crumple zones, intrusion-resistant doors, seat belts and other
features.
Indeed, the Nano will inevitably be considerably safer than the popular mode
of family transport in India today, consisting of a motorbike or scooter with the
father driving, his child standing in front, and the mother seated behind,
holding a baby.
Furthermore, the Nano is better suited to all-weather journeys and is a
genuinely affordable alternative for many people.

Family car
Tata has launched the Nano as a family car for four or five people, but the
company concedes that the Nano is no limousine, with its dimensions of 3.1m
long by 1.5m wide and 1.6m high. Once again, though, the compact
dimensions help to keep costs down, as the smaller the vehicle is, the fewer
materials are required for its construction.
A small, lightweight car can also be fitted with a smaller, lighter engine. In the
Nanos case, the 624.6cc, 33PS, 48Nm twin-cylinder aluminium engine is
mounted transversely under the rear seats, ahead of the rear axle line and
mated directly with the four-speed transaxle.
No common components
Because the Nano was being designed to be such a low-budget car, all
components had to be designed from scratch, with nothing carried over from
Tatas other vehicles.
Furthermore, this clean-sheet-of-paper approach enabled the company to use
production technologies that were appropriate to the Nanos specification and
projected volumes. For example, it is reported that hydroforming is being used
for tubular structures, and rollforming is being used in place of stamping. Other
design features have contributed to the reduced weight, such as a ribbed roof
that adds stiffness and enables thinner steel to be used.
Elsewhere on the car, great care has been taken to minimise tooling and
production costs. One small example of this is similar handles and mechanisms
for the left- and right-side doors. In preparation for exporting the Nano, it has
also been designed with a central instrument binnacle instead of mounting the
instruments in front of the driver which is a concept seen on other peoples
cars such as the Morris Minor and Morris/Austin Mini around half a century
ago.
Girish Wagh headed the team of almost 500 people that developed the Nano
over a four-year period. And although some of the vehicles production
processes may seem low-technology when compared with the heavily
automated plants found in Western Europe, a great deal of digital analysis was
carried out during the design and development phases of the project.
In addition, Tata empowered and encouraged everyone in the company to
contribute ideas and suggestions, on the basis that collective thinking and a

vast pool of common sense would benefit the design and engineering, as well
as helping to save costs.
Where particular expertise was deemed essential to the success of the project,
Tata used leading suppliers as development partners, such as GKN for the drive
shafts and Bosch for the multi-point fuelling system and electronic engine
management system.
High volumes are an important element in low-cost products, and Tata wants
to build one million Nanos per year.
However, a conventional plant to build such high volumes would require a
substantial investment, so Tata has looked at a distributed manufacturing
model, in which entrepreneurs can establish manufacturing facilities based on
Tatas low-cost manufacturing unit that offers a low break-even point.
Nonetheless, Tata has constructed a new factory in Singur, and many of the
suppliers are establishing their own facilities in an adjacent vendor park. It has
been reported that around 90 per cent of the cars components will be
outsourced, with some 75percent coming from single-source suppliers that
have received long-term contracts and high-volume commitments in exchange
for even lower component prices.
Similarly, unconventional servicing concepts have been investigated, such as
training self-employed people who can be certified by Tata to perform
servicing at the customers premises.
A dream comes true
The Tata Nano is the type of project that stems from one persons vision, and
the Nano is the brainchild of Ratan Tata, the company chairman. Originally he
wanted to create a peoples car as a safer, all-weather alternative to twowheelers for families of four or five. Mass transport in India is either not
available or of poor quality, and the nations improving economic climate
means that there is a market for a low-cost car. The first ideas centred on a
low-end rural car with plastic roll-down curtains instead of doors and
windows. However, as the project progressed, it became clear that the market
would respond better to a low-cost version of a conventional car.
Something else that changed during the design phase was the choice of
materials and production processes. For example, high-technology engineering
plastics and adhesives were abandoned in favour of welded steel, as the high-

volume production targets meant that waiting for adhesives to cure was
impractical.
For several years the Nano has been talked about as a 100,000 rupee car, and
this figure is one aspect of the project that has not changed. Ratan Tata says
that the figure of 100,000 rupees was first quoted in an interview with him in
the UKs Financial Times. Although he had only said that the car would cost in
the region of 100,000 rupees, he decided to adopt that figure as a target price.
Over the intervening years, this has been increasingly challenging due to
inflation and rising costs of raw materials such as steel.
Nevertheless, the Nano was launched on 10th January 2008 and Ratan Tata
said the Nano will be on sale later in 2008 for 100000 rupees plus value-added
tax and delivery charges.
A European approach
The most popular European low-cost car is the two-seater Smart, but its price
is four to five times higher than that of the Nano. While the two cars are
similar in some respects, they are far apart in more ways than price. Smarts
philosophy is to offer a compact, safe, clean, economical yet fun vehicle
primarily for transporting one or two people around urban areas. No doubt the
Smart Fortwo has been the subject of considerable value engineering to
reduce the manufacturing and assembly costs, but not to the same extremes
as seen in the Tata Nano.
Furthermore, Smart cars are available with a wider range of powertrains, with
a particular emphasis on fuel economy and exhaust emissions (but note that
Tata plans to introduce alternatives engines and transmissions for the Nano in
the future).
The Smart micro hybrid drive (MHD) is based on a conventional 71PS petrol
engine with an automated manual five-speed gearbox. However, the starter
motor and alternator are replaced by a belt-driven combined starter-generator
unit to serve the car's fuel-saving start-stop function.
When the driver brakes and the speed falls below 8km/h, the engine is
automatically switched off. As soon as the drivers foot comes off the brake
pedal, the engine restarts, first gear is selected and the car can be driven off
all without any noticeable delay.

Fuel savings are said to be 8percent in the New European Driving Cycle (NEDC),
giving 4.3litres per 100km. Carbon dioxide emissions are reduced by a similar
percentage to 103g/km. In city traffic, fuel savings can be as high as 19 per
cent.
For drivers wanting a zero emissions vehicle, Smart is trialling an electric drive
(ED) version of the Fortwo in Paris and London during 2008, with a view to this
variant entering series production in 2009. With fully charged batteries which
takes around eight hours the Smart ED can travel approximately 115km in
the Extra Urban Driving Cycle (EUDC). An 80percent charge is possible in four
hours and it is claimed that the battery will last for 10 years.
The Smart EDs 0-60km/h acceleration time of 5.7 s is similar to that available
from the petrol variants, despite the electric motors power output being much
lower at 41PS (30kW).
Many drivers will also be attracted to the Smart ED because they can enjoy tax
advantages and additional benefits such as exemption from road charging
schemes. Although the carbon dioxide emissions are quoted as being zero, it
has to be remembered that much of Europes electricity is generated in power
stations that emit carbon dioxide and other pollutants.
With the two cars aimed at very different markets, it is not surprising that the
Tata Nano and Smart Fortwo have little in common beyond their compact
dimensions. Nevertheless, the remarkably low showroom price of the Tata
Nano does suggest that Western automotive manufacturers could probably
reduce the price of their vehicles considerably if they were able to devote
resources to that, instead of working towards higher specifications than their
competitors, and striving to meet ever-stricter safety and environmental
targets imposed by politicians.

12.Other Factors
Compressed-air engine
Tata Motors signed an agreement in 2007 with a French firm, Motor
Development International, to produce a compressed air car Nano. While the
vehicle was supposed to be able to travel approximately 200 kilometres
(120 mi) on $3 US of electricity to compress the air, Tata's Vice-President of
Engineering Systems confirmed in late 2009 that vehicle range continues to be
a problem.

Electric vehicle
Tata has discussed the possibility of producing an electric version, and while it
showcased an electric vehicle Nano at the 2010 Geneva Motor Show no such
car is currently on the market.
If an EV Nano is sold it is expected to be the highly affordable electric car
use lithium-ion batteries, and have a range of 80 miles (130 km). A Norwegian
electric car specialist,MiljbilGrenland AS, has been named as a supposed
partner in the project.

Bi-fuel variant
The Nano CNG emax is launched in October 2013. It can run on either gasoline
or compressed natural gas. Initially, it will be sold in Delhi and parts of
Maharashtra and Lucknow, where CNG is available at fuel outlets

QUESTIONNAIRE ON TATA NANO

1.Name :

2.Age:

3.Do you think that Tata Nano is a rural car?

a. strongly agree b. agree c. can't say d. disagree e. strongly
disagree

4.Do you think Nano is a trendy car ?

a. strongly agree b. agree c. can't say d. disagree e. strongly disagree

5.Do you see Nano as a people's car ?

a. strongly agree b. agree c. can't say d. disagree e. strongly disagree

6.Do you think Nano is a safe car?

a. strongly agree b. agree c. can't say d. disagree e. strongly disagree

7.Do you think Nano is an ecological car ?

a. strongly agree b. agree c .can't say d. disagree e. strongly disagree

8.Do you think Nano is a car for young people like you ?
a. strongly agree b. agree c .can't say d. disagree e. strongly
disagree

9.What do you is the target market for Nano?

a. upper class b. middle class c. lower middle class d. lower class

10.Will you be interested in buying Nano?

a. Yes b. No

c. May be

11.What would you buy Nano for?

a. Price b. Brand name c. Comfort d. Looks