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Tata Nano Flops In The Market

2101 words - 9 pages

Literature Review

On

Why TATA NANO Flops in the market

Shabid Ashraf Abhishek Sharma Ankita Singh Neha Dagur Shikha Mathur

Dept. Of Management Studies, Malviya National Institute Of Technology

Abstract: When the Tata Nano, a stripped-down minicar priced at around $2,000, was introduced in 2009, it was marketed as a car that would transform the way aspiring consumers in India and other developing countries got around. But the low-cost automotive revolution fizzled. Selling poorly at home and with exports drying up, the Nano has become a cautionary tale of misplaced ambitions and a drag on sales and profit at Tata Motors. It turns out that those climbing into ...view middle of the document...

Tata Nano originally developed and produced for the local urban market in India and is considered the world's cheapest car manufactured in serial production.

Historical Overview of TATA NANO In 2003 the Tata company began development of car with four wheels designed to replace two-wheeled vehicles that used as family car in India. The first basic condition for the development was that the price would be within reach of the average urban Indian family. To meet this target, the very low price of the final product , it was decided to give up all non- essential components in the manufacture of the vehicles and of course all the luxury features and comforts which increase the costs of the baseline cost . Commercial launch of the Nano model for the Indian market took place in early 2011 , and received high exposure by the international media.

Preliminary market researches conducted before launching the new international model anticipated a great commercial success and one of the research institutes in India predicted that the Nano will control about 65% of the Indian market.

2.Why Tata Nano was meant to Succeed

• Very cheap vehicle (about 2000$).

• Marketed as "car for the people".

• The name Tata. The Tata Corporation is a huge corporation in India (controls the cellular market, energy, telecommunications, textiles and beverages).

• The vehicle is designed to replace the motorcycle and the rickshaw.Currently being sold in India about 1.2 million motorcycles annually. Also, India is known as a country with high precipitation and therefore a transition from the bike to a closed vehicle is logical.

3.Why Tata Nano Fails

Raw Material The car was manufactured with cheap materials which broke after few months.
Moreover, there were many cases of car fires as well as many technical and mechanical problems.
The best incident that demonstrates the failure of the Tata Nano occurred at a vehicle exhibition in New – Delhi, when one of the presenters tried to open the car door and was left with the handle of the door in her hands.

[pic]

fig.1 burning Tata Nano

Use of Diesel India gasoline subsidized by the state, there are subsidies of 50% of its value in the market. The engineers designed two models of Nano: gasoline and diesel. The vehicle that designed for the larger segment of the Indian market, designed to operate on diesel and therefore the cost of using it rise above of what the target costumers could afford.

India’s Road InfrastructureTata was intended to replace the motorcycle and rickshaw in India.
The road infrastructure in India is poor, there are numerous of off-roads.Motorcycle and rickshaw can stand along the difficult road of India, however Tata's low-slung chassis combined with substandard raw materials that make up the vehicle did not meet the required life-long and fell apart when traveling on these roads.

4.Problems

Bussiness Model: “The target market knew how to buy scooters but they didn’t know how to buy...

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