A Review Of

A REVIEW OF

Overview The introduction of the Nano received media attention due to its targeted low price. The car is expected to boost the Indian Economy as well as expand the Indian car market by 65%. The car was envisioned by, Ratan Tata, Chairman of the Tata Group and Tata Motors, who describeS it as an ecofriendly "people's car".

Nano has been greatly appreciated by many sources and the media mainly for :– its low-cost eco-friendly initiatives which include using compressed-air as fuel and an electric-version (E-Nano). Tata Group is expected to massmanufacture the Nano in large quantities, particularly the electric-version, and, besides selling them in India, to also export them world-wide.

The Concept The project to create the world's cheapest production car began in 2003, under the Chairman of Tata Motors, Ratan Tata, inspired by the number of Indian families with two-wheeled rather than fourwheeled transport.The Nano's development has been tempered by the company's success in producing the low cost 4 wheeled Ace truck in May 2005. Contrary to speculation that the car might be a simple four-wheeled auto rickshaw, The Times of India reported the vehicle is "a properly designed and built car".[

The Design

To achieve its design parameters, Tata has refined the manufacturing process, emphasized innovation and sought new design approaches from suppliers. The car was designed at Italy's Institute of Development in Automotive Engineering — with Ratan Tata requesting certain changes, such the elimination of one of two windscreen wipers. The Nano has 21% more interior space and an 8% smaller exterior, when compared with its closest rival, the Maruti 800. The car will come in different versions, including one standard and two deluxe variants. The deluxe version will have air conditioning, but no power steering. The initial production target set by Tata Motors is 250,000 units per year.

Expectations According to one report, India as well as other nations, such as European nations, have great expectations from the Nano and are keenly and eagerly awaiting it, especially the electric version of the Nano, which is expected to be released in 2008, making it in all probability the "world's cheapest electric car" officially on record. The car itself is expected to boost the Indian Economy as well as expand the Indian car market by 65%, according to rating agency CRISIL

Pricing strategy

Tata initially targeted the vehicle as "the least expensive production car in the world" — aiming for a starting price of 100,000 rupees or approximately $2000 US despite rapidly rising material prices. As of August 2008, material costs have risen from 13% to 23% over the car’s development,and Tata now faces the choice of: introducing the car with an artificially low price through govt-subsidies and tax-breaks, or foregoing profit on the car, or using vertical-integration, or partially using inexpensive polymers or biodegradable plastics instead of a full metal-body, or raising the price of the car An increased price on the Nano will likely decrease demand

Thus, the Indian Economy is expected to remain strong and grow in 2008 and beyond, despite the temporary financial turmoil in the US, because the car will also lead to a boost in other sectors of the Indian Economy besides the auto-market. However, due to the current Singur land dispute, the "Stalled Car Factory" is going to incur some more cost to it.

Effect on Indian Economy Economic Times quotes: “Tata Nano’s 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 Rs 1 lakh 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 Rs 1.3 lakh. This brings down the cost of ownership of an entry level car in India by 30%,” the company said in a report.”

Corporate Rivalry 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.

It has been speculated that money to sustain such a prolonged protest involving thousands of TMC party workers came from rival Two/Four Wheeler lobby. Bajaj auto is also developing a low cost car together with Renault-Nissan to rival Tata Nano