FAILURE OF TATA NANO

SUBMITTED TO- Ms ROOPA RAO

SUBMITTED BY- SHILPI GUPTA ISHITA SALOT NURUBI BUIYAN AJAY YADAV
MITTUL KOTHARI

ABSTRACT

The intention behind this project is to study one of the most challenging automobile ventures of the most trusted brand of India called TATA. They introduced a car called the Tata NANO an inexpensive, rear-engine, four-passenger city car and is aimed primarily at the Indian domestic market. But the NANO had faced lots of political and social controversies, flakes and criticisms due to which it suffered majorly as brand. This project concentrates and studies the problems faced by the NANO such as, Economical, Technological Political and Social reason behind NANO plant shift from Singur-Kolkata to Sanand-Gujarat. This project also holds the various Economical, Technological Political and Social reasons which favoured TATA NANO for it coming to Gujarat such as land availability, political stability, labour availability etc. It also contains why though being various strategies and techniques in place the, car lacked in a few things which lead to the failure of TATA NANO such as its Product, Price and Production. Hence the company went through a lot of analysis and went under major changes considering the 4 P's (Product, Price, Place and Promotion) and now have come up with a revised TATA NANO which is predicted to b a success and favourite among the average middle class families of India.

WHAT WENT WRONG WITH TATA NANO?

With the launch of Tata Nano in March 2009, it was evident that the Nano will be future of small cars in India. At a price of INR 1, 00,000 Tata presented Peoples Car with features like good fuel efficiency, rear positioned engine, eco-friendly, stylish look etc. The car received quick recognition from Indian families who could not afford a four wheeler earlier. By May, 2009 approximately 203,000 people had placed orders for a Nano. But in 2010, the sale of the car has seen a sequential fall. In July2010, Tata motors sold 9000 units of Nano, which fell to 8,103 units in August, 5,520 units in September and only 3,065 units in October. In November, which is a festival month and when it is considered auspicious to buy new and big ticket items, the sale of Nano came down to just 509 units, even when the overall sales for Indian auto sector rose by 45% in October 2010. This resulted in the Tata motors overall domestic sales in the passenger vehicle segment fell by 25% to 15,340 units from 20,706 units in the previous year. Even high segment cars like Mercedes sold more than 500 units in the festive month. The main reasons attributed to the consistent fall in the sales of Nano Cars are multiple fire incidents across India, increasing prices of the car and difficulty in obtaining the loan from the banks. Right from the launch of the Nano, there have been various cases of Nano catching fire. The number of such incidents rose to six in August 2010. Experts are blaming it on faulty cabling system which results in short circuit and smoke. Besides the fire incidents, lack of financing options available for Nano customers is also causing a dip in the sales. Banks are not willing to lend to the low-income customers with a concern that they might default. As per the statistics nine out of ten buyers of Nano apply for loan. Also the rate of interest which banks are charging for Nano is around 20-22% as compared to 1314% for other cars. Tata has also increased the price of Nano, after which it is no longer a 1 Lakh Rupee car. Earlier this year company

increased the price by Rs. 5000 due to BS IV emission norms and by Rs. 30,000 after few months due to increased input cost. After having taken cognizance of the issues which led to the sales decline, TATA has taken various steps to rectify the situation. Keeping in mind the fire incidents, company will provide free safety upgrades. Additional safety features are proposed to be added in exhaust and electrical system of the car. Company has launched an exchange scheme under which customers can swap their twowheeler for a Nano, by paying the differential amount. Company is also taking initiative to provide finance for Nano with the help of its financing arm Tata Motors Finance Ltd, by tying up with nationalized and cooperative banks etc. Company has improved interaction with customers and dealers to take their feedback in a bid to improve the product. There are various kiosks set up across the country to target the rural market, where people have neither driven a car nor visited a showroom. Also steps have been taken to reduce the lead time for the vehicle and to change the perception that there are still long booking queues for Nano. Along with addressing the current concerns and issues coming up with product, Tata is planning to bring the electric and hybrid variant of Nano. Company is now looking at evolution of the vehicle including upgrades. The various variants of Nano, which are planned to be launched in coming years include Tata Nano diesel, a Tata Nano Convertible, Tata Nano Station Wagon, Tata Nano Electric and Tata Nano Hybrid. There is high probability that the higher end models will be targeted at the International market. The prospective countries for launch are Brazil, Indonesia, China and Russia. In the month of October, when the sale of Tata Nano was down by 85%, its rival Maruti had a record break sales with an increase of 50.32% compared to last year. The most sold models were Alto, Wagon R and Swift. Another competitor Hyundai with its winning cars like i10, i20 and Santro, recorded a growth of 22.70 per cent in the domestic market as compared to last year. But with the new initiatives and actions to provide additional protection to customer

with easy availability of loans, Tata is hopeful that there will be renewed demand of Nano very soon

WHY NANO HAS MOVED FROM SINGUR TO SANAND ?

POLITICAL FACTOR: Political factors are how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs and political stability.

When the brand name TATA is attached, the expectations of consumer is huge. The major political controversy - the Nano-Singur controversy affected Tatas brand equity. The political pressure imposed by Mamta Banerjee disturbed the working environment of employees. TATA MOTORS Nano car project at Singur in West Bengal received a severe jolt when more than 1000 workers left the project. The workers included nearly 200 engineers and 800 ordinary workers. Finally Ratan Tata also took the decision of leaving Singur and shifted its plant to Sanand, Gujarat. As a result a lot of jobs were lost in Singur. And thousands of employees were offered jobs at Sanand.

ECONOMICAL FACTOR:
Operate and make Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses decisions. One of the problems faced by Nano is making financial options available to Nano buyers. TATA Motors officials say that banks and finance companies were not geared to cope with the risk profile of Nano buyers. The conversion time was around 14 days in case of Nano. The consumer had to go circling around various departments and officials to get the loan. The banks were also charging high interest rates i.e. 20% per annum.

SOCIAL FACTOR:
Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates.

deeper marketing failure seen in Nano was Nano initially failed to reach the customers it was targeted at. The initial customers already had a car and hence they were different from the customer segment that had inspired Ratan Tata to drive out a 1 lakh rupee car.

 Their distribution strategy failed to bridge the car with the lower middle class segment, for which the car was built. The company failed to understand the psyche of the target customer. The target customer was a little apprehensive, shy and hesitant to come to showrooms. Tata failed to realize this and employed highly affluent employees who spoke fluent English. Customers could not connect to such officials and even the employees failed to woo the customers

TECHNOLOGICAL FACTOR:
Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change.

Another

major problem seen in Nano was regarding quality issues (the incidents of fire and smoke). a few cases of smoke emanating from it.

There have been 3 instances of the car going up in flames and The technological fault here was instances of foreign material
on the exhaust system and additional foreign electrical equipment installed on the exhaust. This led to the sporadic incidents of fire. Also this negative publicity made the buyers switch to buy competitors car like Maruti Alto.

REASONS WHICH FAVOR NANO TO COME TO GUJRAT

The company had received overwhelming support from several states for relocating the plant. After examining various sites in these states and carefully evaluating offers from the respective governments, the company has concluded that the site at Sanand and the offer from the Gujarat Government is in the best interest of the project. The integrated project, comprising the mother plant and the vendor park, will come up on an area of about 1100 acres. The plant, to begin with, will produce 250,000 cars per annum. The capacity is expandable up to 500,000 cars per annum. The project, including Tata Motors' plant, vendor facilities and service providers, will together generate over 10,000 direct and indirect jobs. Speaking at the announcement, Mr. Ratan N. Tata, Chairman of Tata Sons and Tata Motors, said, "The site in Gujarat, already under the possession of the state government, will help Tata Motors establish a new dedicated mother plant with the shortest possible time lag and least possible incremental project cost. This is Tata Motors' maiden venture in Gujarat, and will broad-base the company's manufacturing footprint. We are happy to contribute to Gujarat's strong industrial progress by creating an auto cluster, which will have a cascading impact on the state's economy." While awaiting the Sanand plant's completion, Tata Motors will explore the possibility of manufacturing the Nano at its existing facilities at Pune and Pantnagar, and launch the car in the last quarter of this financial year.

4PS FOR TATA NANO

PRODUCT: An impeccable piece of vehicle, covering all segments of the market, from youngsters to senior citizens. Attractive, Small yet comfortable. The overall look and the rear engine made the Tata nano a compatible one. The features in Tata Nano are similar to high end cars available in the Indian market.

PRICE: Offering the lowest price in this segment. The tata nano was been developed first of its kind. All the auto manufacturers first design the car, calculate the costs and then decide the price. But the uniqueness of Tata Nano was such that the first the price was been decided and then the car was been designed and developed. So Tata Nano made the investments in accordance and still managed to have the profit from this kind of pricing.

PLACE: Overall the Tata Nano was been targeted to the Indian Customers. Initially the Middle class families of the Cities which move the Two-Wheelers and later on moving to the rural areas. With the existing Tata dealers and roping in its other business lines like Westside, Croma , Titan stores, the distribution will never be an issue for Nano. The display of cars was been done at this place. Along with the Premium car expo shows in various cities.

PROMOTION: Coming from the Tatas stable, the Nano has already created a brand image. The price of the car has offered enough promotion not only in India but also globally. And after the conflict in the west Bengal and Gujarat CM Narendra Modi doing a lot for Tata Nano Project it had already created more stronger value in the minds of people. Although the CM was not promoting it but the help which he gave was like promoting the Car. Now the Tata Nano advertisement has started in the form of TV commercials and newspapers.

REFERENCES
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