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What's the future for Tata Nano?

December 19, 2013:


At a time when Indias largest selling car company, Maruti Suzuki India Ltd, was devising strategies to
discontinue its lowest-priced car the Maruti 800 and make Alto its base model, another company
was stretching its engineering prowess to produce the worlds cheapest car.
Termed an engineering marvel by many, the initiative became a showcase project for Tata Motors.
More and more foreign brands were entering the Indian market at the time, with much higher-priced cars.
The market was also showing a favourable shift towards mid-segment sedans.
The Nano project made many companies, including Bajaj, quickly rework their strategies on low-priced
cars, as they felt they should have been the ones to launch this product in the country as a natural
transition from being one of the bigger two-wheeler makers.
Passenger car market
The production of passenger vehicles in the country was recorded at 3.23 million in 2012-13 and is
expected to grow at a compounded annual growth rate (CAGR) of 13 per cent during 2012-2021, as per
data published by the Automotive Component Manufacturers Association of India (ACMA). Passenger
car sales stood at 1.89 million units in 2012-13.
Three basic categories in the market are hatchbacks, sedans and SUVs. Recently, this classification has
become a lot more fluid as newly-launched models are starting to incorporate aspects of two or more
segments; these are called crossovers. This trend is in line with more advanced markets, where crossovers
are extremely popular.
The Indian market continues to be dominated by hatchbacks though, within this, the mini-car segment
(800cc or lower) has receded in importance. Currently, the mini-car segment makes up 21 per cent of the
market.
Marutis brands continue to be leaders with the top three slots being led by the Alto, the Swift and the
Dzire in 2012-13.
The Table alongside gives an idea of the current market shares of various companies.
Journey of the Nano
After a long delay, the much-awaited Nano hit the market in April 2009. The Rs. 1 lakh car was made
available to the customer at a little above Rs. 1 lakh, on the road. The launch was marked by high-profile
media coverage and then came a waiting period, as expected.
Heads turned as soon as people saw a Nano on the road and many wanted to touch and feel the car and
look inside the engineering marvel.

Auto magazines got down to analysing the vehicle and why it could be priced at Rs. 1 lakh.
One such analysis would throw some light on the issue and also give an idea of what the customer finally
got. A series of events in the life of the new baby would chronicle its journey over the next few years.
April 2009: Limited launch
Sept-Oct 2009: Three Nanos catch fire in Delhi, Ahmedabad and Lucknow. Tata Motors orders checks on
7,500 Nanos
July 2010: Tata Motors raises Nano price by 4 per cent
Oct 2010: Price further increases by Rs. 9,000
Nov 2010: Six Nanos catch fire, prompting the company to offer free protection. Monthly sales plummet
to just 509 vehicles.
Jan 2011: Nano sales become off-the-shelf across India
Nov 2011: Nano gets a facelift, with a more powerful and better fuel economy engine.
March 2012: Nano sales hit the peak of 10,475 units for the month
June 2012: Sales dip to 5,025 units
Positioning, communication
During the same period, Tata Motors tried various positioning and communication strategies.
Initially positioned as a replacement for two-wheelers, it moved towards a safety platform for the twowheeler families. It was also positioned as the easy car for the wife, and so on. Some of the ads over the
years give us an idea of the companys strategy.
Situation Today
With all the changes to the car, improved features and fuel economy, the car is now priced at
above Rs. 1.5 lakh, and the sales numbers as low as 1,505 in the month of February 2013.
The company changes its positioning to appeal to the youth with a fresh new campaign awesomeness
unveiled

The Problem
The strategy team for Tata Nano has various questions on its mind:

Will the new strategy succeed? Is there a future for the product?

Or will the company have to burn more fuel before it figures out the way ahead?

Are there any other strategies missing?

You are the new head of marketing at Tata Motors, responsible for the future of Tata Nano, and
have been asked to either endorse the current strategy and fine-tune it, if necessary, or suggest a
completely new path that Tata Motors should follow.