NO TO NANO

PDBC ASSIGNMENT

PRINCE K THOMAS

1901120
PGDM-B
 No to Nano
The idea of the world’s cheapest car was conceived by Ratan Tata on a rainy day after he saw a family
of four on a bike.
“The fact of unsafe travel was bothering me,” Tata, the erstwhile chairman of the Tata group recalled
in an interview in March 2011 . “What really motivated me…was constantly seeing Indian families
riding on scooters, four or five on a scooter, maybe the child sandwiched between the mother and
father…on slippery roads in the dark.”
But after 9 years this interview ,the car is ready to drive into sunset with Tata announcing that the car
would be produced only on demand. There was a lot of going on behind the story of Tata Nano. It not
only changed the face of Indian affordable car, but paved path for the rise of a new political leader. It
rewrote the 34 year old political history of Indian state of West Bengal.
Tata Nano was a compact hatchback designed for Indians s an inexpensive rear-engine hatchback
intended to appeal to current riders of motorcycles and scooters — with a launch price of
one lakh rupees in the year 2008. Tata Motors began development of an affordable car that would
appeal to the many Indians who ride motorcycles. The purchase price of this no frills auto was brought
down by dispensing with most nonessential features, reducing the amount of steel used in its
construction, and relying on low cost Indian labour. The nonessential features include, removal of the
passenger's side wing mirror, having one wiper blade, having only three lug nuts per wheel, removal
of the fuel filler cap from the fuel tank. The expectations from the release of the car was huge, A 2008
study, by Indian rating agency CRISIL, thought the Nano would expand the nation's car market by 65%
but, as of late 2012, news reports have detailed the underwhelming response of the Indian consumer
to the offering; sales in the first two fiscal years after the car's unveiling remained steady at about
70,000 units although Tata appears intent on maintaining a capacity to produce the car in much larger
quantities, some 250,000 per year.

From its birth itself the car has been in the eyes of controversies. As discussed earlier the car gave a
new face to the west Bengal politics. The company decided to build its plant in Singur in 2006, about
50 kilometres from the state capital Kolkata. Tata Motors planned to invest up to Rs2,000 crore and
turn Singur into an auto city. To set up its sprawling factory, the then Communist Party of India-Marxist
(CPIM) government of West Bengal sought to take over 997 acres of fertile farmland, sparking
a severe backlash. Widespread protests broke out across the state, leading to the ouster of the
communists after over three decades in power. The state soon got its first woman chief minister in
Mamata Banerjee who had spearheaded the Nano protests. Given the political turbulence in West
Bengal, the Tatas, in October 2008, shifted the Nano factory to Sanand in Gujarat whose chief minister
Narendra Modi reportedly approved the project over just an SMS. Finally, in 2009, the car was
launched in two variants: a basic model priced at Rs1,12,735 and the luxury version costing
Rs1,70,335.The launch of one of the world’s smallest cars sparked unprecedented euphoria in India
and significant excitement across the world. In 2010 , around 90000 units were sold , since then things
have been on downhill.

The Nano’s death was confirmed by production numbers: Tata Motors produced 1 unit in June, down
from 275 in the same month last year. Exports were zero, versus 25 in June 2017. The company
acknowledged that the car in its “present form cannot continue beyond 2019.” There are many
reasons that states the failure of Tata Nano.

 A mistake.
In 2013 Tata Motors attempted a fresh attempt to launch the car again in the Indian Market.
Ratan Tata admitted marketing Nano as “the cheapest car” initially was a mistake. He further
said: “I always felt that Nano should have been marketed towards the owner of a two-wheeler
because it was conceived giving the people who rode on two-wheels with the whole family an
all-weather safe form of affordable transportation, not the cheapest.”
 A trouble maker…..
From the beginning, Nano courted trouble. It was originally planned to be rolled out from Tata
Motors' proposed plant at Singur in West Bengal, where it faced intense political and farmer
protests against land acquisition. The company had to shift its production to a new plant at
Sanand in Gujarat. Instances of the car catching fire initially after it was launched didn't help
its cause either.
 …. And a loss maker
Nano become a loss-making model for Tata Motors with ex-Tata Sons chairman Mistry, who
was abruptly removed from the post, even went on to claim that the Nano "consistently lost
value, peaking at Rs 1,000 crore". Mistry said the cost of Nano's production was always higher
than Rs 1 lakh and the project needed to be shut down if Tata Motors wanted to remain
profitable. He had also claimed that Tata Motors did not stop producing the car due to
"emotional reasons".

The Tata group conducted various market research survey and tired to revive the dying name of Nano.
One was the Nano Air, which Tata Motors agreed to develop in partnership with French firm Motor
Development International in 2007. That car was built to run on compressed air and would have zero
emission. An electric version too was in the works. Both models did not take off. There are various
options being explored to revive the project which could entail low investment. The company could
push Nano into the taxi-hailing segment through deals with Uber or Ola. There are two other
possibilities. One, it could feature an electric powertrain to meet future fuel economy regulations and
two, it could be recast as a futuristic alternate fuel /hybrid model.
However, the company has not entirely abandoned the Nano. The company will manufacture the
Nano hatchback on an order basis from its Sanand facility in Gujarat. Meanwhile, the company will
look to expand the manufacturing facility to cater to the growing demand of the Tigor and the Tiago
for the Indian market.
SWOT ANALYSIS:
1. STRENGHT
The greatest preference of Tata Nano is its little size, which makes it extremely advantageous to
drive on narrow city streets. Another focal point is its moderate sticker and great fuel effectiveness.
The car was classy with its modest price. The user feels the presence of a maximum speed of 105kph
accompanied by a fuel tank capacity of 24 litres.
2. WEAKNESS
There are few limitations also which is its small under powered engine and very low pick-up. If car is
loaded with 4 passengers and AC is turned on you would feel car is under powered. There is also not
a big boot to boost about. his car lacks an efficient power steering and also an ABS. Moreover, the
paddles of this variant of the Tata Nano are quite oddly placed. There were some Nano catching fire
during the initial release of the car.
3. OPPURTUNITIES
Tata Nano would have been a revolution changing the lower price section market with correct type
of marketing. Nano 2012 is a new ray of hope in increasing number of sales and making many
satisfied customers. The increase in buying power of the younger generation is a major factor for
India’s automobile growth. Tata Nano diesel priced at 3.5lacs has already created a hype among its
customers as Tata is known for its diesel products with high mileage efficiency like Indica
and Indigo CS.
4. THREATS
After the release of Tata Nano every manufacture wanted to grab that share of market and started
releasing new competition in the market. Vehicles like Alto, Chevy Spark and second hand vehicles
were major substitutes for Nano. People were looking for alternatives for the main reason that it
cannot be much used for driving in highways or long distances as the engine cc is low. The main
threat was from an indirect competitor – Motorcycles. Nano was in between motorcycles and car
and it was proving to be unreliable due to technical glitches

Reference:
1. https://economictimes.indiatimes.com/industry/auto/cars-uvs/is-it-end-of-the-road-for-
tatas-nano/no-more-a-peoples-car/slideshow/64870025.cms
2. https://en.wikipedia.org/wiki/Tata_Nano
3. https://economictimes.indiatimes.com/industry/auto/cars-uvs/rip-nano-worlds-cheapest-
car-goes-up-in-smoke/articleshow/64941654.cms
4. https://qz.com/india/1326635/tata-nano-the-slow-death-of-the-worlds-cheapest-car/