FAILURES OF TATA NANO

1. FINANCIAL MANAGEMENT: COURSEWORK
A case study on the failures of Tata Nano?
TABLE OF CONTENTS
1. INTRODUCTION………………………………………………………………2
2. SWOT ANALYSIS..................................................................3
Strengths
Weaknesses
Opportunities
Threats
3. HISTORY……………………………………………………………………………………….4
4. So what could have been done to position the car better? …4
5. Commercialising of Nano…………………………………………………..5

2. INTRODUCTION
Established under the parent company, Tata Group, in 1945, Tata Motors
Limited has become India’s automobile company. It was the first Indian
automobile company to Liston the New York Stock Exchange. It is the cheapest
car in today’s world. It is also called one lakh car. Its body style is 4 door one
box. Its length is 3,099mm, its height is 1,652mm and width is 1,495mm. It
kerb weight 600kg-635kg.
In order to answer my question I would like to analyse and examine the
internal strengths and weaknesses, and the external opportunities and threats
for Nano. This will be done with the aid of a SWOT analysis.
STRENGTHS
Cheapest
Stylish
Eco-friendly
Good mileage efficiency
OPPORTUNITIES
Low maintenance
World wide appeal
Cost control
Parking space
WEAKNESSES
Less boot space
Not fit for hilly areas
Small tyres
Light vehicle
Low engine capacity
Window wind down by hands
Poor engine cooling
and hence overheating
THREATS
Traffic Congestion
Security not sure
Competitors like Bajaj, Maruti
Segmented as poor man’s car

3. STRENGTHS
Price was the biggest strength for the mini vehicle. Even US president Obama
was all praises for the Nano during his Indian visit, an appreciation which soon
spread across the world. The strengths of the product included its small size,
ease in handling and good mileage efficiency. It is stylish and eco-friendly too.
WEAKNESSES
It was segmented as a poor man’s car. It has very less space and it is not fit for
hilly areas also as it has very small tyres. It is a light vehicle and low engine
capacity. Window wind is down by hands which mostly people don’t prefer to
do.
Within a few months of initial sales, technical problems were found in the
product and there were reports of Nano catching fire, which further weakened
the trust for the brand Nano.
Due to inflation also Nano’s price has further increased due to increase in the
prices of raw materials such as steel, rubber etc.
OPPORTUNITIES
It needs low maintenance and it is world wide appeal. It has cost control and
that is 1 lakh only. It doesn’t need much parking space”.
Even Rata Tata has admitted that they were wrong in the positioning of the
Nano and that the intimal marketing effort was poor. Instead Nano should
have been marketed as a utility car rather than a “cheap car”.

4. THREATS
After the launch of Nano there were many manufactures that wanted to take
advantage of the hype of the Tata Nano and started working on manufacturing
alternative for Nano. Upcoming cars like H800 from Hyundai priced around 1.6
lakh, Maruti Cervo 600cc priced at around 1.7lakhs to 2lakhs were imposing
threats growth of Nano’s market share. 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. The main threats were from an indirect competitor- motorcycle.
Nano was between motorcycles and cars. Thus some people were going for the
cost effective solution of buying motorcycles thereby affecting Nano sales.
HISTORY
Tata motors began development of an affordable car that would appeal to
many Indians who drive motorcycles. The purchase price of this no frills auto
was brought down by dispending the most non essential features, reducing the
amount of steel used in its constructions and relying on low cost Indian labour.
The introduction of the Nano received much media attention due to its low
price.
The cost cutting features of Nano
The Nano’s trunk is only accessible from inside the car, as the rear hatch does not open.
One windscreen wiper instead of the usual pair.
No power steering , unnecessary due to its light weight.
Three lug nuts on the wheels instead of the usual four
Only one wing mirror
No airbags on any model

5. So what could have been done to position the car
better?
1)
2)
3)
4)
A dual positioning strategy one for the smaller cities and the other form
the urban areas could have worked.
Focusing on some of the features likemanoeuvrability-the Maruti Suzuki
Alto was positioned this way, Mileage Zen and Performance –Hyundai
Verna.
Positioning the brand and not the car-There could be an initial
positioning of the TATA brand rather than the cheap car, till the
marketers understood the features sought by the consumers.
Focusing on special segments like Women drivers or college students as
the first car-this would have been helped the TAA’s create a generation
of customers and keep these students in the same family as they grow
up.
COMMERCIALIZATION OF NANO
It will be commercialized in whole India. It is mostly targeted to the middle
class and lower middle class people.