Introduction:

 Global Perspective:

In the 20th century, automobile industry was considered a luxury with the US being the only epicenter
of the manufacturing world. With the advent of assembly line introduced by Ford Auto, cars started
rolling out in batches and hence the notion changed from thriving in opulence to being a necessary
commodity. But cars and motor bikes were still exported from the US to different parts of the world,
thus US maintaining a hegemony in the automobile sector. Some of the major automobile
manufacturers were Ford, General Motors, General Electric etc. Currently, the global automotive car
market is growing at a rate of only 2 percent per annum. The passenger car segment has emerged as a
major driving force for upstream industries like steel, iron, aluminium, rubber, plastics, glass, and
electronics and down stream industries like advertising and marketing, transport and insurance. The
car industry generates large amount of employment opportunities in the economy.

 Asian and European competition:

After 1970s, new set of competition emerged from developed countries like Japan, Germany, France
etc. which started manufacturing more advanced cars in terms of quality, cost, durability and
endurance. Japan manufacturers Honda and Toyota, with its concept of ‘lean production’, were able to
attract global customers, including America. They set a new benchmark in the automobile industry by
adopting ‘6 sigma’ manufacturing techniques. In the luxury sector, European companies have
dominated the world with brands like Mercedes, BMW, Volkswagen, Royal Enfield etc. rolling out
sophisticated vehicles for affluent category. Currently, China single-handedly lead the table by
manufacturing about one-third automobiles globally, but The USA and Japan are global leaders in
terms of exports.

 Indian Scenario:

Initially, in the 20th century, most of the modes of transport was through rail or cart with Hindustan
Motors being the only car manufacturer prevailing at that era. But after the enactment of LPG policy in
1991, new players emerged and there was a surge in supply of automobiles. The prices of cars and
bikes plummeted, incomes started rising and thus, the Indian middle class was able to purchase at
ease. The automobile industry in India is expected to be the world's third largest by 2016, with the
country currently being the world's second largest two-wheeler manufacturer. Two-wheeler
production is projected to rise from 18.5 million in FY15 to 34 million by FY20. Passenger vehicle
market in India is expected to cross the three-million-unit milestone during FY 2016-17, and further
increase to 10-million-unit in FY 2019-20.
 Some of the major car and bike manufacturers are Bajaj, Maruti, Tata Motors, Hero Moto corps., Ashok
Leyland (in commercial sector) to name a few, with Maruti dominating the market share in the car
industry (setting up a benchmark by rolling one car in every 12 seconds) and Honda in the bike
industry. Recently, India overtook China to emerge as the world's biggest market for two-wheelers. A
total of 17.7 million two-wheelers were sold here last year, that's over 48,000 units every day.

The Indian automobile industry has a prominent future in India. Apart from meeting the advancing
domestic demands, it is penetrating the international market too. Favored with various benefits such
as globally competitive auto-ancillary industry, production of steel at lowest cost, inexpensive and high
skill manpower, entrenched testing and R & D centers etc. the industry provides immense investment
and employment opportunities.

Factors determining the growth of the industry

 Fuel economy and demand for greater fuel efficiency that focuses on performance-oriented products
 Sturdy legal and banking infrastructure
 Increased affordability, heightened demand in the small car segment and the surging income of the
Indian population.
 Government technology modernization fund
 More thrust for hybrid cars
 Availability of cheap skilled workers
 Market segmentation and product innovation
Product Identification:

In our case study, we shall analyze the rise and fall of TATA NANO, a product of TATA Motors Limited. We
shall have the SWOT and PEST analyze and try to establish causal and correlation effect of its failure.

 Justification and significance:

As urbanisation gathered pace, personal transport had become a big issue, since mass transport
offered was of poor quality. NANO, which was a brain child of Ratan Tata, raised hopes for a lot of
middle class families by giving them the status of owning a car. Expectations were increasing amongst
the customers regarding the product features and its efficiency. TATA Group and its subsidiaries were
flourishing across all the sectors. So, Nano was also prevised to become a grand success.
Unfortunately, the low-cost car did not take off well and turned out to be a pipe dream. This urged us
to have a thorough market research on the product and diagnose what went wrong.

 Parameters of study:
We shall be focusing on the following parameters-
 Features provided by the car- mileage, engine, transmission, interior and exterior features
 Safety parameters
 Alternative modes of transport and competitors
 Social and managerial perspectives

SWOT Analysis:

PEST Analysis:

Implications and Learning:

 Managerial –
 Define a clear marketing strategy. Have a thorough market research for that.
 Target right set of consumer segment.
 Focus on other countries as well (underdeveloped).
 Communicate a clear, targeted value proposition, differentiated from competing
offerings.
 Academic –
 Stick to the price quoted. If not possible, rework on pricing.
 Be ready for any sort of technical exigencies.
 Work on rumor management.
 Social –
 Understand consumer behavior (social status, consumer stigma, income aspect, etc.)
 Have a clear understanding of political scenario of the area.
 Avoid extreme terms during marketing, such as ‘Cheapest car’. Instead, ‘most affordable
car’ could have been used.