A Report On

“Effect of Nano Car on Automobile Market”

In The Partial Fulfillment of
MBA Degree
2009-2011
Rajasthan Technical University, Kota

Submitted To: Submitted By:

Mr. Rajat Rakesh Saini

faculty MBA- II sem

Apex Institute of Management and Science

Jaipur

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 TABLE OF CONTENT

S. NO. CONTENT P.NO.

1. INTRODUCTION ABOUT NANO 3

2. TATA NANO PERFORMANCE 7

3. VEHICLE SUMMARY 8

4. FINANCING 11

5. DESIGN 14

6. COST CUTTING FEATURES 16

7. PRICE & MODELVERSIONS 16

8. COMPETITORS 26

9. CONCLUSION 28

10. BIBILIOGRAPHY 29

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 1. INTRODUCTION ABOUT NANO:

NANO : Not a small burden for Tata Motors

Kolkata, India — The burst of flashbulbs and the limelight that the launch of the
Nano attracted globally last week may have enhanced India’s national pride and
its position as a small car manufacturing hub. But the world’s cheapest, and
perhaps smallest, car has also put extra burdens on its maker, Tata Motors,
already struggling under the weight of a huge Jaguar/Land Rover acquisition last
year and the global economic downturn.

Just one day after the launch, the global rating agency Standard & Poor's
downgraded the company to B+ from BB- and kept the company “on credit watch
with negative implications.” This means that the company could be downgraded
again in the near future, which could significantly increase its borrowing costs.

“A combination of high debt levels and material deterioration in Tata Motors'

cash flows, derived from an adverse operating environment, will affect its credit
protection measures,” said Standard & Poor's credit analyst Manuel Guerena. Any

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improvements the Nano may bring to Tata’s cash flow can only be expected after
2010. Meanwhile, the capital expenditure required to fund Jaguar Land Rover and
Nano could result in negative operating cash flows for the company, he added.

Given the hoopla that surrounded the unveiling of the Nano in January last year
and the acquisition of Jaguar Land Rover last March, no one would have imagined
that Tata Motors –India’s largest automaker and a part of the venerable Tata
Group – would be struggling to fund its operations just a year down the line.

The hidden economics of Nano car

At the price of Rs. 1 lakh price point (the price of the cheapest variant). So, why
would they still want to produce it?

Granted, the one lakh car has been a very successful branding campaign and has
got them a lot of publicity both in India and internationally. But there might be a
more economically rational explanation as well. Tata is going to manufacture only
around 50,000 Nanos a year. But the demand is likely to be far higher than supply.
Tata has come up with an innovative way to capitalize on this.

Booking for the Nano closes on 25th of April, and one must pay the full price up-
front to book a car. At the close of the booking, a random selection will decide
who gets the cars. The remaining customers can choose to get back the money or
lend it to Tata at 8%. Tata seems to be betting on the fact that a lot of people will
choose the second option. This is of tremendous use to Tata which gets cheap
money to finance its acquisition of Jaguar and Land Rover

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Tata’s Nano, one man’s gain, another’s loss

March 21st, 2009

SANAND - As Tata Motors is all set to launch Nano, the world’s cheapest car, on
Monday, residents in Sanand, where Tata’s new Nano plant is being set up, are
upbeat at the prospects.

Residents were excited, looking forward to the jobs it would create.

“The direct benefit of the project is the employment that it will create, but there
are several indirect benefits. It will create opportunities for the transport
business, hotel industry and all other small businesses will get a fillip,” said
Ravubha Vaghela, a businessman.

But there were others for whom the wait seemed to be getting longer.

“The project has definitely put Sanand on the world map, but I don’t think the
workers and farmers will be much benefited out of it,” said Bahadurbhai, another
resident.

Back in Singur, the mood is sombre despite the fact that the opponents of the
project achieved their goal by driving out the Tata Motors project.

“It is shocking and very sad. So many boys and girls took training and were
dreaming of jobs. There were proposals for huge development. Singur residents
have been deprived of all that,” said Srikanto Chatterjee, a resident.

Tata Motors Ltd moved in its ultra low-cost Nano car to Sanand in Gujarat
following violent protests at Singur in West Bengal.

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The plant to be built at Sanand, near Ahmedabad, is located on about 1,100 acres,
and will have an initial capacity of 250,000 units, which can be expanded to up to
500,000 cars per year.

TATA NANO

The Tata Nano is a rear-engined, four-passenger city car built by Tata

Motors, aimed primarily at the Indian market. The car is very fuel efficient,
achieving around 26.00km/l on the highway and around 22.00km/l in the
city. It was first presented at the 9th annual Auto Expo on 10 January 2008,
at Pragati Maidan in New Delhi, India. Nano had a commercial launch on
March 23, 2009 and a booking period from April 9 to April 25 , generating
more than 200,000 bookings for the car. The sales of the car will begin in
July 2009, with a starting price of Rs 115,000 (rupees), which is approximately
equal to UK£1,467 or US$2,421 as of June 2009. This is cheaper than the
Maruti 800, its main competitor and next cheapest Indian car priced at
184,641 Rupees. Tata had sought to produce the least expensive production
car in the world for a starting price of Rs.100,000 (approximately US$2,000 in
June 2009).

Nano" means "small" in Gujarati, the language of the founders of the Tata Group.
In English, the prefix "nano-" is often used to mean small. This derives from the
Greek root 'nanos', meaning dwarf.

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 2. PERFORMANCE & SPECIFICATIONS

Performance: The 2-cylinder engine – delivering 35 PS @ 5250 rpm and a torque

of 48 Nm @ 3000 rpm – enables the car to have a top speed of 105 kmph and
negotiate inclines with a gradeability of 30%.

Fuel efficiency: 23.6 km/litre, certified by the Automotive Research Association of

India (ARAI) under mandated test conditions, which is the highest for any petrol
car in India.

Emission: The high fuel efficiency, coupled with a low kerb weight of 600 kg,
ensures that the Tata Nano – at 101 gm / km – has the lowest CO2 emission
amongst cars in India. The Tata Nano is BS-III* compliant and is BS-IV* ready. It is
also available in BS-II* norms.

Safety: The Tata Nano’s safety performance exceeds current regulatory

requirements – it passes the roll-over test and offset impact, which are not
regulated in India. It has an all sheet-metal body, reinforced passenger
compartment, crumple zones, intrusion-resistant doors, besides mandatory seat
belts and complies fully with existing Indian safety standards. Tubeless tyres –
among which the rear ones are wider endowing extra stability – enhance safety.

Warranty: 18 months or 24,000 km, whichever is earlier.

3. VEHICLE SUMMARY
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Name: Tata Nano
Model: Petrol
Manufacture: Tata motors
Also called: The people’s car
Assembely: charodi , sanand, ahamdabad, Gujarat
Engine: 624 cc(38 cu in)
Length: 3100mm(122 in)
Width: 1500mm(59.1)
Heigth: 1600mm(63 in)
Weigth: 680.4 kg
Car Body Type: Hatchback
Segment: A Segment
Top Speed: 90
Fuel Consumption: Highway 26.00
Fuel Consumption: City 22.0

ENGINE SPECIFICATIONS

Displacement: 624cc, 3 cylinder

Engine Type: Petrol
Maximum Power: 33hp
Maximum Torque:

OTHER SPECIFICATIONS
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Seating Capacity: 4
Tyre Size:
Steering: No Power Steering
Brakes: Front Disk, Rear Drum
Gears: 4 Manual
Fuel Tank: 30.00
Body Color Bumpers: Yes
Tachometer: No
Alloys: No
ORVM Indicator: No
Xenon Headlamps: No
COMFORT AND CONVENIENCE

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AC: Without Climate Control
Power Windows:
Central Locking: Manual
Remote Boot: No
Remote Fuel Filler: No
Rear Wiper: No
Rear Defogger: No
Steering Adjustment (Rake/Reach): No
Driver Seat Adjustment: Manual
Leather Seats: No
Door Mirror: Driver Side
Tinted Glass: No
Rear AC Vent: No
Folding Rear Seats: No
Sun Roof: No
Buttons/Controls on Steering: No
Auto Viper: No
Auto Headlamp: No

ACTIVE AND PASSIVE SAFETY

Airbag: No
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Parking Sensors: No
Fog Lamp:
Traction Control: No
EBD: No
ABS: No
ESP: No

4. Tata Nano Financing

Tata motors have entered into an agreement with the largest bank in the country
that is the State Bank of India which will manage the entire booking process. The
application forms for the Tata Nano will be available at a nominal price of Rs. 300
and the application forms will be available at various locations such as the Tata
motors showrooms, State bank of India branches, Tata indicom outlets, titan
show rooms and various other places like Westside and chroma stores.

After collecting the nano application forms customers can opt for financing of the
cookin amount or could pay the amount themselves. Those of you who are
interested in availing financing can approach about fifteen banks and non banking

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financial companies. The names of these banks and non banking financial
companies have been listed below. Tata Nano financing or loans can be obtained
from

 State Bank of India

 Tata Motor Finance
 State Bank of Patiala
 ICICI Bank
 State Bank of Travancore
 State Bank of Mysore
 State Bank of Hyderabad
 State Bank of Bikaner
 State Bank of Jaipur
 State Bank of Indore
 Axis Bank
 Punjab National Bank
 Federal Bank Corporation Bank
 Indian Bank
 Central Bank of India

To refer to the updated list of tata nano banks you can visit tatanano.Com. You
can even book the car at that website.Tata Motors has entered into agreements
with 18 preferred banks / NBFCs to enable prospective customers to get finance
and facilitate booking of the car.

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  Posted on » Wednesday, March 25, 2009

MUMBAI: Motoring experts yesterday gave a rousing reception to the Tata

Nano.

They hailed the world's cheapest car as "one of the greatest bargains of all time"

and "a triumph of Indian ingenuity."

The tiny car, which costs just 100,000 rupees ($2,000) for the basic model, was

unveiled to great fanfare on Monday, with Tata Motors chairman Ratan Tata

saying it would revolutionise travel for millions of Indians.

India's trade Press agreed that the sporty, jellybean-shaped Nano passed the test

as a bona fide vehicle, earning comparisons to the European Smart car and

classic "People's Car" the Volkswagen Beetle.

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Much was made of the car's looks.

5. DESIGN

Ratan Tata, the Chairman of Tata Motors, began development of the world's
cheapest production car in 2003, inspired by the number of Indian families
with two-wheeled rather than four-wheeled vehicles.The Nano's

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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 Chairman is reported to have said, " It is not a car with
plastic curtains or no roof —it's a real car.”

To achieve its design goals, Tata 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 as the
elimination of one of two windscreen wipers. Some components of the
Nano are made in Germany by Bosch, such as Fuel Injection, brake system,
Value Motronic ECU, ABS and other technologies.

The Nano has 21% more interior space (albeit mostly as headroom, due to
its tall stance) and an 8% smaller exterior compared to its closest rival, the
Maruti 800. Tata offered the car in three versions: the basic Tata Nano Std;
the Cx; and the Lx. The Cx and Lx versions each have air conditioning, power
windows, and central locking. Tata has set its initial production target at
250,000 units per year.

6. Cost cutting features

 The Nano's trunk does not open. Instead, the rear seats can be
folded down to access the trunk space.

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  It has a single windscreen wiper instead of the usual pair.
 It has no power steering.
 Its door opening lever was simplified.
 It has three nuts on the wheels instead of the customary four.
 It only has one side view mirror.

7. Price

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
US$2000 (using exchange rate as of March 22, 2009) 6 years ago, despite
rapidly rising material prices at the time.

As of August 2008, material costs had risen from 13% to 23% over the car’s
development, and Tata faced the choice of :

 introducing the car with an artificially low price through government

subsidies and tax-breaks
 forgoing profit on the car
 using vertical- integration to artificially boost profits on cars at the
expense of their materials industries
 partially using inexpensive polymers or biodegradable plastics instead
of a full metal-body.
 raising the price of the car.

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Model versions

At its launch the Nano was available in three trim levels.

 The basic Tata Nano Std priced at 123,000 Rupees has no extras;

 the deluxe Tata Nano CX at 151,000 Rupees has air conditioning;
 the luxury Tata Nano LX at 172,000 Rupees has air conditioning,
power windows and central locking
 the Nano Europa, European version of the Tata Nano has all of the
above plus a larger body, bigger 3-cylinder engine, anti-lock braking
system (ABS) and meets European crash standards and emission norms.

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The base model will have fixed seats, except for the driver's, which will be
adjustable, while the deluxe and luxury models will get air conditioning and
body coloured bumpers.

Photographs of some Nano models at the Auto Expo 2008 in New Delhi.

The interior
of the Nano
Red Tata Nano : standard
model
Nano in yellow Rear of Tata Nano
in yellow

Engine: 2 cylinder petrol with

Bosch multi-point fuel
injection (single injector)
all aluminium 33 
horsepower (25 kW)
624 cc (38 cu in)

Value Motronic engine

management platform
from Bosch

2 valves per cylinder

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 overhead camshaft

Compression ratio: 9.5:1

bore × stroke: 73.5 mm

(2.9 in) × 73.5 mm
(2.9 in)

Power: 33 PS
(33 hp/24 kW) @ 5500
rpm

Torque: 48 N·m
(35 ft·lbf) @ 2500 rpm

Layout and Rear wheel drive

Transmission
4-speed manual
transmission

Steering mechanical rack and

pinion

Turning radius: 4 metres

Performance Acceleration: 0-70 km/h

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 (43 mph): 14 seconds

Maximum speed:
120 km/h (75 mph)

Fuel efficiency (overall):

20 kilometres per litre
(5 litres per 100
kilometres (56 mpg-imp;
47 mpg-US))

Body and dimensions Seat belt: 4

Trunk capacity: 15 L

(0.53 cu ft)

Suspension, Tires & Front brake: drum

Brakes
Rear brake: drum

Front track: 1,325 mm

(52.2 in)

Rear track: 1,315 mm

(51.8 in)

Ground clearance:
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 180 mm (7.1 in)

Front suspension:
McPherson strut with
lower A arm

Rear suspension:
Independent coil spring

12-inch wheels

Diesel

Wheel sunplugged .com reported that an anonymous source claimed a diesel

variant would be available in September 2010.

Compressed-air engine

Tata Motors is working with a French firm on using compressed air as an

energy source. The company has tied up with Moteur Development
International (MDI) for this purpose.
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Potential 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 [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 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. ”

Singur factory pullout

After much speculation, Tata Motors announced on May 19, 2006 that it will be
manufacturing Tata Nano from Singur, West Bengal. However, within a week
protests were started by a few farmers in the area against the acquisition of their
lands by Tata. The cause was taken up by Mamata Banerjee, the leader of
Trinamool Congress. The situation escalated with Tatas threatening to pull out,
and disruption of compensation for farmers who had volunteered to sel

l their land by anti-acquisition activists. This was followed by a state-wide bandh

by Trinamool Congress in October. The government banned political parties from

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holding meetings or processions at Singur and installed a huge police force there.
There was widespread violence in the clashes between the police and the farmers
on December 2, 2006.

On December 4,2005 Mamata Banerjee entered into a hunger strike. A 48-hour

strike was later called by her to protest the death of Tapasi, a Save Farmland
Committee campaigner, whose burnt body was found at the Nano plant site in
Singur. Two CPM activists were later convicted and sentenced to life
imprisonment for the murder. On the 24th day of her strike, Banerjee was given
oxygen support and finally called off her fast after appeals from the then
President Abdul Kalam and Prime Minister Manmohan Singh.

As the protests over the land continued in 2007,Ratan Tata accused that the
competitors had a role in the controversy. The acquisition of land was initially
criticised in February 2007, but later approved by the Calcutta High Court in 2008.
As political unrest and rains hampered the construction, Tata Motors delayed the
launch of Nano to September 2008.

Violence continued throughout 2008 and on September 2,2008 Tata Motors

announced that they have suspended work at Singur. On October 2 ,2008 Tata
Motors announced that they are pulling out of Singur. On October 7 2008, it was
announced that the Chief Minister of Gujarat, Narendra Modi had signed an MoU
with Tata Motors for allocating land for Nano factory in Sanand in Ahmedabad
district of Gujarat.

Criticism, issues and problems

India has 8 percent of the world’s vehicle fatalities and less than 1 per cent of
its cars, with more than 90,000 people killed on the country’s roads every
”
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 year. Introducing a million Nanos into the mix may bring more – and
unwelcome – headlines.

Tata, which has the only crash-test facility in the country, said that the Nano
"exceeds current regulatory requirements". And while it is not a deathtrap –
it has crumple zones, seat belts and strong seat anchors – it is worth bearing
in mind that total vehicle crash testing (rather than just frontal impact),
airbags and antilock braking systems are not mandatory.

Without these, the Nano would not even be considered for approval in
Britain. Adding them would double its price in India, which is why they have
been omitted.

Tata Motors will offer a version of the Nano with these safety-features, including
an airbag system in its electric version. The Nano has an all sheet-metal body
made from Japanese and Korean steel, with safety features such as crumple
zones, intrusion-resistant doors, seat-belts, strong seats and anchorages, and the
rear tailgate glass bonded to the body. Tires are tubeless.

Used car market effects

The Nano is alleged to have severely affected the used car market in India, as
many Indians opt to wait for the Nano's release rather than buying used cars,
such as the Maruti 800 (a rebadged Suzuki Alto), which is considered as the
Nano's nearest competitor. Sales of new Maruti 800s have dropped by 20%, and
used ones by 30% following the unveiling of the Nano. As one automotive
journalist summarises; “People are asking themselves – and us - why they should
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pay, say, 250,000 Rupees for a Maruti Alto, when they can wait and get a brand
new Nano for less in a few months’ time, a car that is actually bigger”.

8. Competitors

Rival car makers including Bajaj Auto, Fiat, General Motors, Ford Motor, Hyundai
and Toyota Motor have all expressed interest in building a small car that is
affordable to more middle-class consumers in emerging markets. The bulk of
demand there is for small cars because people are much more sensitive to fuel
prices. Rival car makers including Bajaj Auto, 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 eco-friendly electric-cars like Tara Tiny, Oreva
Super (both reportedly even cheaper than Tata Nano) and REVA pose even more
significant danger to Nano. There are also rumors of Maruti Suzuki introducing a
lower priced version of Alto to counter Tata Nano.

Who Will Buy the Nano?

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It is highly speculated that the majority of the buyers for Nano (expected now in
2010) will come from the motorcycle users. But, this may not be as much as it is
anticipated, purely from the energy and pricing structure involved38. Energy and
transport experts are in no doubt that in a growing Indian economy; demand for
cars through 2015 will be persistent at 14% a year, maybe a little less in the
megacities with saturation39. The Nano car will be a success (similar to Maruti
80040 when it arrived in the 80's). However, as the experts predict, it is
inconclusive to say that the cheapest car in the world will be the new mode of
transport for the middle income group and a majority of the motorcycles will shift
to buy the Nano, especially in the immediate future.
There is also some discussion of Maruti 800 (and other manufacturers) in
competition to the Nano in the similar price range.

9. CONCLUSION:

The Nano represents the spirit of breaking conventional barriers. From the
drawing board to its commercial launch, the concept, development and
productionisation of the car has overcome several challenges. It is to the
credit of the team at Tata Motors that a car once thought impossible by the
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world is now a reality. It is not a car with plastic curtains or no roof it’s a real car.
The bulk of demand there is for small cars because people are much more
sensitive to fuel prices. Rival car makers including Bajaj Auto, 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 eco-friendly electric-cars like
Tara Tiny, Oreva Super (both reportedly even cheaper than Tata Nano) and REVA
pose even more significant danger to Nano. There are also rumors of Maruti
Suzuki introducing a lower priced version of Alto to counter Tata Nano. The
acquisition of land was initially criticised in February 2007, but later approved by
the Calcutta High Court in 2008. As political unrest and rains hampered the
construction, Tata Motors delayed the launch of Nano to September 2008.

Violence continued throughout 2008 and on September 2,2008 Tata Motors

announced that they have suspended work at Singur. On October 2 ,2008 Tata
Motors announced that they are pulling out of Singur. On October 7 2008, it was
announced that the Chief Minister of Gujarat, Narendra Modi had signed an MoU
with Tata Motors for allocating land for Nano factory in Sanand in Ahmedabad
district of Gujarat. The Nano will also replace many overloaded and worn-out
two-stroke polluting vehicles, both two and three-wheeled. According to Anumita
Roychowdhury, associate director of the Centre for Science and Environment in
New Delhi, "the low-cost cars will be disastrous" in the current policy and
regulatory framework. Tata Group is expected to mass-manufacture the
Nano, particularly the electric-version and besides selling them in India, to
also export them worldwide.

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Nano was advance technology car with build up security and it’s can be hand
to lower purchaser people .small is beautiful seem to have become the marketing
mantra of consumer goods to push demand to slowdown.

Webiliography

www.tatanano.com

www.tatamotors.com

www.google.co.in

www.wikipedia.com

Bibliography

Business Today
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Times of india

India Today

Economics times

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