DECLARATION

I, TUMUL ASTHANA student of PGDM-IB IVth Semester at SMS,

Varanasi here by declare that the research project report on "TATA NANO
- from Ideation to its Distribution" is the result of my own effort, is raised
on information collected, guidance given by my mentor & faculty member.

The industrial analysis is correct to the best of my knowledge this

report so far has not been published anywhere else.

TUMUL ASTHANA

1
 PREFACE

Industry analysis is finding of data, relevant to specific industry. This

project is a written presentation with observation and references derived
from the secondary data.

The report starts by giving an industry profile, internal view about the
companies. In order to achieve the objective and better under stand the
problem of industry, it was decided to collect the secondary data concerning
to particular industry.

TUMUL ASTHANA

2
 ACKNOWLEDGEMENT

Nothing can be gained or acquired without hard work which leads to

success.

The success of my project is the amalgamation of my hard work and

cooperation of sources, who delivered their precious time without any
hesitation.

I do not have adequate words to convey my emotion rather than

feeling of gratitude, for the people who helped me in making my project
report purposeful.

I take the opportunity to convey my sincere gratitude to my research

mentor Mrs. Pallavi Pathak (Sr. Lecturer) for her helpful guidance during
my survey period.

First of all I would like to thank God and my parent who showered
their blessing upon me in each step of my survey. I am highly thankful and
immensely obliged for his constant guidance and words of inspiration.

Last but not the least, I specially wish all my friends especially as
without their valuable support this report would have not been possible.

TUMUL ASTHANA

3
 CONTENTS

1. INTRODUCTION

2. OBJECTIVES

3. RESERCH METHODOLOGY

4. ABOUT TATA NANO

5. DEVELPOMENT OF ONE LAKH CAR

6. DESIGN

7. COST CUTTING FEATURES

8. PRICING STRATEGY

9. TECHNICAL SPECIFICATION

10. PROMOTIONS AND DISTRIBUTIONS

11. TARGET MARKET AND COMPETITION

12. CONCLUSIONS

13. LIMITATIONS

14. BIBLIOGRAPHY

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 AUTOMOBILE INDUSTRY OF INDIA

A Nations economy is well known from its transport system. For

instant and rapid growth in economy, a well-developed and well-networked
transportation system is essential. As India's transport network is developing
at a fast pace, Indian Automobile Industry is growing too. Also, the
Automobile industry has strong backward and forward linkages and hence
provides employment to a large section of the population. Thus the role of
Automobile Industry is very essential in Indian economy. Various types of
vehicles are manufactured by the Automobile Industry. Indian Automobile
Industry includes the manufacturing of trucks, buses, passenger cars, defense
vehicles, two wheelers, etc. The industry can be broadly segmented into the
Car manufacturing, two wheeler manufacturing and heavy vehicle
manufacturing units. The major Car manufacturer are Hindustan Motors,
Maruti Udyog, Fiat India Private Ltd., Ford India Ltd ., General Motors
India Pvt Ltd., Honda Siel Cars India Ltd. Hyundai Motors India Ltd., Skoda
India Private Ltd., Toyota Khrloskar Motor Ltd.

The two-wheeler manufacturing is dominated by companies like TVS,

Honda Motorcycle & Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj,
etc. The heavy motors like buses, trucks, defense vehicles, auto rickshaws
and other multi-utility vehicles are manufactured by Tata-Telco, Ashok
Leyland, Eicher Motors, Bajaj, Mahindra and Mahindra, etc.

The Indian Automobile Market growth is expected to grow at a

CAGR of 9.5 percent amounting to Rs. 13,008 million by 2010 which is a

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big in number. The Commercial Vehicle Segment has been contributing to
the automobile market to a great extent. So as in passenger luxury cars now

Many foreign companies like Mercedes, Suzuki, Chevrolet, Honda,

Mitsubishi, Toyota, Hyundai etc. have been investing in the Indian
Automobile Market in various ways such as technology transfers, joint
ventures, strategic alliances, exports, and financial collaborations, (ike
maruti joined hands with Suzuki in passenger cars, same as Mahindra with
Renault, hero joint ventures Honda in two wheeler segment, ashkoa with
Leyfand in commercial vehicle segment. The auto market in India can boast
of attractive finance schemes, increasing purchasing power, and launch of
the latest products. Investments in the automobile industry by the foreign
companies in india help in strengthening the india's economy.

India's giant automotive manufacturer company TATA MOTORS has

largest share in commercial vehicle, and now they have acquired the jaguar
and range rover globally, capturing international market too, also they are
exporting their key products in the international market.

Total sales of major car manufacturers in India registered a figure of

0.674 million units at the end of March, 2007. The number of car exports in
India was 39,295 units. General Motors, Maruti, and Honda accounted for
60 percent of the market sales at the end of April, 2007. As the increase in
per capita income is observed in india, There has been an increase in the
purchase of motorcycles and cars both in the rural as well as urban areas.

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 Some vital statistics regarding the automobile market in India has
been mentioned below:

• Two wheelers - 2nd largest in the world

• Commercial Vehicle - 4th largest in the world
• Passenger car- 11th largest in the world

The Indian automobile market consists of a wide variety of vehicles

such as light, medium, and heavy commercial vehicles, cars, scooters,
mopeds, motor cycles, 3 wheelers, and multi-utility vehicles such as jeeps
and small trucks. The modern automobile market in India has been
considering key issues in the process of growth:

• Customer care and not just 'service'

• Domestic as well as multinational investments
• Searing through cut-throat competition
• Road safety
• Anti-pollution norms
• Coordination with the government to enable advancement
• Used vehicle trade

The future of Indian Automobile market is bright as it looks forward

to manufacturing and implementing new innovations such as electric cars as
provided by Reva, CNG technology is used in new upcoming models of
maruti and Honda has launched their new hybrid car in the Indian market.

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Alternate fuels like CNG and LPG, and probably customized Internet
automobile orders.

SEGMENTATION OF AUTOMOBILE INDUSTRY

Among the two-wheeler segment, motorcycles have major share in the

market. Hero Honda contributes 50% motorcycles to the market. In it Honda
holds 46% share in scooter and TVS makes 82% of the mopeds in the
country. 40% of the three-wheelers are used as goods transport purpose.
Piaggio holds 40% of the market share. Among the passenger transport,
Bajaj is the leader by making 68% of the three-wheelers.

Cars dominate the passenger vehicle market by 79%. Maruti Suzuki

has 52% share in passenger cars and is a complete monopoly in
multipurpose vehicles. In utility vehicles Mahindra holds 42% share.

In commercial vehicle, Tata Motors dominates the market with more

than 60% share. Tata Motors is also the world's fifth largest medium &
heavy commercial vehicle manufacturer.

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 E-BUSINESS OF AUTOMOTIVE INDUSTRY

The online vehicle market in India has been providing excellent

services to online vehicle sellers as well online vehicle buyers. The
advantage of online vehicle buying is that one can get an exhaustive list of
cars and bikes and even make a purchase without having to leave the
comforts of one's house. Many websites like autoindia.com, ebay.ca.in are
there to promote online business of auto industry.

Sellers can make their vehicles available instantly through the Internet
to millions of buyers at the domestic level. Online vehicle selling sites
advertise in daily newspapers and magazines ensuring buyer as well as seller
attention benefiting both.

Online Vehicle Market in India provides valuable information on

vehicle overviews, dealers, financing institutions, insurance companies, and
also product comparisons. All information is with regard to the region of the
online vehicle purchaser, many customer services are offered online. The
online Indian automobile market is part of the growing automobile industry
in India.

The Online Vehicles market in India provides full security to its

buyers and sellers. Some of the security measures have been mentioned
below:

 Good online companies do not keep a record of the transactions made

nor are they involved in the transacting process.

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  No trustee or financial department services offered by the websites.

 Discouraging the practice of advance payment. Thus, avoiding the

possibility of fraud.

 Reliable websites like Cartradeindia.com, ebay.ca.in make sure that

that their customers are not victims of manipulated electronic paper
work.

All these services are offered tree for the customers and hence they
facilitate the growth of the online vehicles market in India. Some of the
companies that offer their services in this area are Cartradeindia.com,
IndiaAutoMall.com, CarWale.com, AutoIndia.com, Autotrader.com,
eeautomaid.com, atozsupermarket.com, and IndiaAutimobile.com. Online
Vehicle Market in India has thus made vehicle purchase potentially easier
for the modern Indian automobile enthusiast and comes equipped with
unparalleled market research and valuable utility tools that make vehicle-
buying a lot less complicated a procedure than it used to be.

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 ENVIORNMENTAL ANALYSIS OF AUTOMOTIVE
INDUSTRY

1. POLITICAL FACTORS

ARAI provides technical expertise in R&D, testing, certification,

homologation and framing of vehicle regulations. ARAI is a co-operative
industrial research association established by the automotive industry with
the Ministry of Industries, Government of India. It works in harmony and
complete confidence with its members, customers and the Government of
India to offer the finest services, which earned for itself ISO 9001, ISO
14001, OHSAS 18001 and NABL accreditations. ARAI is well-equipped
with state of- the-art infra-structural facilities and highly qualified
manpower.

The Indian Auto Industry is harmonizing both Safety & Emission

regulations with International Standards for sustained growth of the Industry
for combating the environment and become a global export hub.

India has a well established and Regulatory Framework under the

Ministry of Shipping, Road Transport and Highways in which SIAM
(SOCIETY OF INDIAN AUTOMOBILE MANUFACTURERS) plays a
very important role. All the stake holders are part of the regulation
formulation setup. The ministry issues the notifications under the Central
Motor Vehicle Rules and Motor Vehicles Act.

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 The Safety Regulations are being aligned with the ECE regulation and
the Road Map prepared by SIAM (SOCIETY 6F INDIAN AUTOMOBILE
MANUFACTURERS) envisages alignment by 2010.

The In use Vehicle Emission norms have been tightened with effect
from 1st October 2004 and computerization model has been developed by
SIAM (SOCIETY OF INDIAN AUTOMOBILE MANUFACTURERS,
which is already in place in the Major Metro Cities and would be extended
throughout the country in a phased manner.

2. ECONOMICAL FACTORS

India's huge geographic spread- Mass transport system

There is a very large transportation system in India for the public

which helps the economy to the large scale.

Increasing road development

The new development of road system is contributing a lot towards the

transportation system of the country. Better and wide roads and the material
used to build the roads is very long lasting and environment friendly. With
the better material used the life of the roads is increased which is helping the
economy of the country as less expenses will occur.

Higher GDP growth

With the better transportation system the material is moved to

different places in short time and easily which helps in increase of the GDP
as more products can be made in same time.

Increasing Per Capita income

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 The per capita income of India is increasing due to which the buying
power of the consumers has also increased making people buy cars and
bikes.

Cheaper (decline interest rates) and easier finance scheme

The banking system in India is in a good shape. It provides people

with easier and cheaper finance schemes which help the consumers to buy
vehicles easily. This helps in the increase in sales of the automobile industry
which also helps in the th increase of country's economy.

3. TECHNICAL FACTORS

 India is harmonizing its Emission Norms for Four Wheelers with the
European Regulation and has adopted Euro III, equivalent norms in
11 Metropolitan Cities from Apr 1 2005. For Two Wheelers, which
constitutes 70% of the vehicle population unique Indian emission
norms, which are one of the tightest in the world have been adopted.

 The Fuel Quality plays a very important role in meeting the stringent
emission regulation. The fuel specifications of Gasoline and Diesel
have been aligned with the Corresponding European Fuel
Specifications for meeting the Euro II, Euro III and Euro IV emission
norms.

 The use of alternative fuels has been promoted in India both for
energy security and emission reduction Delhi and Mumbai have more
than 100,000 commercial vehicles running on CNG fuel. Delhi has the
largest number of CNG commercial vehicles running anywhere in the

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 World. India is planning to introduce Biodiesel; Ethanol Gasoline
blends in a phased manner and has drawn up a road map for the same.

 The Indian auto Industry is working with the authorities to facilitate

for introduction of the alternative fuels. India has also setup a task
force for preparing the Hydrogen road map. The use of LPG has also
been introduced as an auto fuel and the oil industry has drawn up
plans for setting up of Auto LPG dispensing station in major cities,

 The latest technology is being adopted by the companies and is being

launched in India as well. One of the latest technologies is the Hybrid
Engines which are launched by Honda motors in India.

 A lot of new safety measures are now taken into consideration before
the car or any other motor vehicle is launched to ensure its safety and
reliability.

4. SOCIAL FACTORS

 The Automotive Research Association of India ( ARAI ) has been

playing a crucial role in assuring safe, less polluting and more
efficient vehicles. Reducing pollution helps creating a better and
healthy environment for the society.

 85% of the cars in India are financed. The banks are giving finance
options easily helping the people who cannot afford to buy
themselves. Low interest rates translating to low financing and
acquisition costs hence greater affordability.

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  The new technology of Hybrid engines launched in India (Honda
CIVIC) is very much safe and helps the environment making it better
for the social community. This technology is coming worldwide and
is also available in Canada now.

 New measures are being taken to make the automobiles less polluting.
This will help in reducing the exploitation of atmosphere. Better
atmosphere gives better life.

COMPETITIEVE FACTORS OF AUTOMOBILE INDUSTRY OF INDIA

The automotive sector is one of India's largest and fastest growing

manufacturing sectors. It is ranked the 11th largest passenger car producer in
the world. In the category of motorcycles and scooters, India is ranked 1st
and 2nd respectively. With India increasingly liberalizing its market place,
many new joint ventures evolved, resulting in close to 24 global auto
manufacturers setting up their shop in India.

COMPETITION IN INDIA

As a result, competition in India's automobile had been heating up in

the recent years. Many global players in the automobile have already set up
presence in India. Most of them are through tie-ups with dominant local
players, while some are done entirely on their own.

In the absence of strong competition in the past, the local car

manufacturer Maruti Udyog Ltd (MUL) has virtually dominated the Indian
automotive market in the passenger segments since the 1980s. As the

15
automotive manufacturing sector rapidly evolved through the dynamics of
open market and deregulation, many new joint ventures (both technical and
financial) were formed between local players with leading global
manufacturers. In 1982, MUL, then a wholly government-owned company,
signed up a collaboration agreement with Suzuki of Japan to establish the
volume production of contemporary models. Subsequently, the licensing
regime was scrapped in 1993 paving way for 17 new ventures, of which 16
are now manufacturing cars since then; there has also been an emergence of
new competition for higher value segments of the passenger car market.
Hence, local players like MUL also began to face competition from new
foreign car makers. Ford entered the mid-range market with the Ikon model
in April 1998, a move which was followed by Honda, Mitsubishi, Hyundai,
and Daewoo. Other players, Hyundai and Daewoo, have since improved
their share of the passenger car market with new models

For the 4-wheelers segment, MUL/Suzuki dominates the automotive

landscape holding a 33% share of the passenger car market in 2004/05. In
the second place is Tata Motors, a local company, commanding 26% share,
while Hyundai Motor ranked third with 15% share and the rest split amongst
close to 2 dozen other manufacturers. For the 2-wheelers segment, it remains
quite a local dominant game but global players also have obvious presence
in the market. Major players in this segment include Bajaj Auto, TVS
Suzuki, LML Limited, Hero-Honda Motors, Yamaha Motor India, Kinetic
Engineering, Maharashtra Scooters Majestic Auto, Kinetic-Honda Motors,
Royal Enfield (India), Scooters (India), Greaves Ltd. Foreign manufacturers
also have presence in India through their 100% owned subsidiaries, e.g.

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Honda Motorcycle, Scooter India Pvt. Ltd. M/s Honda Motor Co., Japan,
Yamaha Motor, Japan. The largest player is Hero Honda Motors, accounting
for 40% of market share, followed by Bajaj Auto and TVS Motor, which
account for 27% and 18% respectively.

COMPETITION IN THE INTERNATIONAL MARKET

Besides on the competition observed amongst all global players in the

domestic Indian market, India as an automotive manufacturing country is
also pitting against other competitors in the international market. In terms of
exports of automobile, India is ranked 29th, while China, the other huge
automotive factory ranked 17th. For exports of auto parts, India was 26th,
while China came in 11th. The top country for exports of automobile and
auto parts was Germany.

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 TATA MOTORS

COMPANY OVERVIEW

Tata Motors is India's largest automobile company. Established in

1945, it is also among the world's top five manufacturers of medium and
heavy trucks and the world's second largest medium and heavy bus
manufacturer. It entered the passenger vehicles segment in 1991 and now
ranks second in India's in this market.

The company, formerly known as Tata Engineering and Locomotive

Company, began manufacturing commercial vehicles in 1954 with a 15-year
collaboration agreement with Daimler Benz of Germany. It has, since,
developed Tata Ace, India's first indigenous light commercial vehicle, Tata
Safari, India's first sports utility vehicle, Tata Indica, India's first
indigenously manufactured passenger car, and the Nano, the world's
cheapest car. Tata Motors has over 1,400 engineers and scientists in six
R&D centres in India, South Korea, Spain and the UK. Its vehicles are
exported to Europe, Africa, the Middle East, South and Southeast Asia and
South America.

AREAS OF BUSINESS

Tata Motors makes passenger cars, multi-utility vehicles and light,

medium and heavy commercial vehicles.

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 Passenger cars: The company launched the compact Tata Indica in
1998, the sedan Indigo in 2002 and the station wagon Indigo Marina
in 2004. Tata Motors also distributes Fiat's cars in India.

 Utility vehicles: The Tata Sumo was launched in 1994 and the Tata
Safari in 1998.

 Commercial vehicles: The commercial vehicle range extends from the

light twotonne truck to heavy dumpers and multi-axled vehicles in the
above 40-tonne segment.

 Passenger buses: The company also manufactures and sells passenger

buses, 12-seaters to 60-seaters, in the light, medium and heavy
segments.

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JOINT VENTURES, SUBSIDIARIES, ASSOCIATES

Tata Motors has joint ventures with Marcopolo, the Brazil-based

maker of bus and coach bodies, and with Fiat Auto (to build a commercial
vehicle at Fiat's facilities in Cordoba, Argentina).

OTHER ASSOCIATES INCLUDE

 Tata Daewoo Commercial Vehicle Company, a 100-per cent

subsidiary of Tata Motors in the business of heavy commercial
vehicles (www.daewootruck.co.kr/).

 Tata Motors European Technical Centre is a UK-based, 100-per cent

subsidiary engaged in design engineering and development of
products.

 Telco Construction Equipment Company makes construction

equipment and allied services. Tata Motors has a 60 per cent holding;
the rest is held by Hitachi Construction Machinery Company, Japan
(www.telcon.co.in/).

 Tata Technologies provides specialized engineering and design

services, product lifecycle management and product-centric
information technology services (www.tatatechnologies.com/).

 Tata Motors (Thailand) is a joint venture between Tata Motors (70 per
cent) and Thornberry Automotive Assembly Plant Co (30 per cent) to

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 manufacture and market the company's pickup vehicles in Thailand
(www.tatamotors.co.th/).

 Tata Cummins manufactures high horsepower engines used in the

company's range of commercial vehicles (www.tatacummins.com/).

 HV Transmissions and HV Axles are 100-per cent subsidiaries that

make gearboxes and axles for heavy and medium commercial
vehicles.

 TAL Manufacturing Solutions is a 100-per cent subsidiary that

provides factory automation solutions and designs and manufactures a
wide range of machine tools (www.tal.co.in/).

 Hispano Carrocera is a Spanish bus manufacturing company in which

Tata More has a 21-per cent stake (www.hispano-net.com/).

 Concorde Motors is a 100 per cent subsidiary retailing Tata Motors'

range of passenger vehicles (www.concordemotors.com/).

 Tata Motors Finance is a 100 per cent subsidiary in the business of

financing customers and channel partners of Tata Motors
(www.tatamotorfinance.com/).

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LOCATION

Tata Motors' plants are located at Jamshedpur (eastern India), Pune

(west), and Lucknow and Pantnagar (north). Tata Motors and Fiat have set
up a common manufacturing facility at Ranjangaon, near Pune. The
company is establishing a new plant at Singur (eastern India

FUTURE OUTLOOK

Tata is growing very strongly in the motor industry now. With the
purchase of jaguar and land rover TATA motors have stepped into the
international market as well. Now this brand in few years will also be giving
competition in the luxury segment of car market.

With the launch of NANO which is the cheapest car in the world till
today is going to be a big sell in the Indian market which will also give the
company a good growth opportunity from the revenue generated by it

Some of other projects in the future to be launched are

• Compressed Air Car

• Low cost low carbon vehicle
• Electric vehicles

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 PRODUCT AND SERVICES OVERVIEW

PRODUCTS

1. PASSENGER CARS

Tata Indica

The Tata Indica is a hatchback automobile range manufactured by

Tata Motors of India. The models are also exported to Europe, Africa and
other countries from late 2004. It is the first passenger car vehicle from Tata
Motors. Tata Indica is also considered India's first indigenously developed
passenger car. In the UK a badge engineered version was imported by the
MG Rover Group and sold as the Rover CityRover. Other popular foreign
markets include South Africa where the Indica and the Indicab models
(known as B Line) are sold. Tata Indigo (Sedan) - In 2002, Tata introduced
India's most competitive indigenous sedan: the Indigo. Designed in-house, it
is best thought of as a sedan version of the Tata Indica, with which it shares
a large number of parts. It is sometimes referred as the working man's luxury
car.

Indieo SX

In 2005, Tata Motors released the Indigo SX, an up market version of

the Indigo sedan with a leather-trimmed steering wheel and leather seats,
among other features like electrically operated outside rear view mirrors
(ORVM), VCD player with LCD screens behind headrests, apart from the

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standard features like power steering, power windows and central locking. It
competes with Honda City, Hyundai Accent and Maruti Suzuki SX4 /
Maruti Swift DZire.

Indigo XL

The Tata Indigo XL went on sale in January 2007. It is the long wheel
base version of the Indigo sedan. It features a 200 mm (7.9 in) stretched
wheelbase and a 101 hp engine. The Petrol model has MPFI 16 valve twin
cam engine, whereas the diesel variant features a DICOR engine.

Indigo CS

Tata launched the Tata Indigo CS at the 2008 Auto Expo in New
Delhi. CS stands for compact sedan and is the world's shortest sedan. The
Indigo CS falls within the norms which allow to be subjected to lower excise
duty which brings the cost of the car down.

Indigo Marina

The station wagon version called the Indigo Marina (called the Indigo
SW in export markets) was unveiled at the New Delhi Auto Expo 2004.

Indigo Marina Advent

In 2004 Tata Motors unveiled the Tata Indigo Marina Advent which is
a soft roader similar to the Fiat Adventure. It is said to be a crossover vehicle
exhibiting certain SUV like characteristics

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Indigo XL

The Tata Indigo XL went on sale in January 2007.[1]. It is the long

wheel base version of the Indigo sedan. It features a 200 mm (7.9 in)
stretched wheelbase and a 101 hp engine. The Petrol model has MPFI 16
valve twin cam engine, whereas the diesel variant features a DICOR engine.

Indigo CS

Tata launched the Tata Indigo CS at the 2008 Auto Expo in New
Delhi. CS stands for compact sedan and is the world's shortest sedan. The
Indigo CS falls within the norms which allow it to be subjected to lower
excise duty which brings the cost of the car down. The Indigo family had a
small facelift and prelaunch in September 2006

2.UTILITY VEHICLES

Tata safari

The Tata Safari is an SUV produced by Tata Motors of India. It is the

first SUV to be designed, developed and manufactured entirely in India The
Safari is said to deliver almost the same power and torque as the Mitsubishi
Pajero, but available at 60% of the Pajero's price (although mis hasn't been
thoroughly confirmed). It was released in 1998 with a 1.9-litre Turbo Diesel
engine.

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Tata Sumo

Tata Sumo is a multi-utility vehicle produced by India's Tata Motors.

The vehicle was released in 1997 and was one of the first passenger vehicles
designed in India. The Sumo received an extensive facelift in 2004 and was
renamed the Sumo Victa in face of competition from relatively modern
competitors. A sports utility vehicleversionof the automobile, named Sumo
Grande, was released in 2008.

3. PASSENGER COMMERCIAL CARRIERS

 Buses
 Winger
 Magic

4. COMMERCIAL TRUCKS

Tata novus

Tata Novus is the Tata Motors' first new offering from its acquisition
of Daewoo's truck manufacturing unit. Tata Novus is based on the Daewoo
Novus truck available in South Korea. It was launched in December 2005.
Tata Motors became the first Indian manufacturer to introduce 300
horsepower (220 kW) heavy commercial vehicles.

26
SERVICES
As Tata is going to provide this car with rupees one lakh only, so it
may not give the same service like its other vehicles. »But it's post purchase
services will be better than a costlier bike. Customers may get minimum
three services from Tata in any of it's servicing center, all over the country.
We the future customers can also hope for additional services from:
1. Various services provided are workshops for car and truck service and
repairs.
2. They also have various spare part outlets to purchase original spare parts
for various products
3. Some other services provided by them are extended warranties. Extra
hours of work and mobile service vehicle which allows you to get your
car serviced at your door step.
4. You can also order parts online and get them delivered
5. Special accessories are available for the products
GOALS AND OBJECTIVES
The main goal of the company is to increase its annual sales of products
which is shown in the chart below this paragraph. Other objectives are:
 Getting into the international marketing
 To capture the maximum market share in India
 To get into the luxury car segment
 To make its service network the number one in India, which currently
is maruti

27
28
 OBJECTIVES

1. To know about the Tata Nano.

2. To know about its cost cutting features.

3. To know about its pricing strategy.

4. To know about its promotion and Distribution strategy.

5. To know about its target markets and competitors.

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 RESEARCH METHODOLOGY

"Research is a careful investigation or the inquiry through search for

the facts in the branch of knowledge. Research methodology refers to the
methods, technique that are used for the activities involved in performing the
research operations such as making observation, recording data etc."

Problem definition: - Research on Tata Nano- from Ideation to its

Distribution

Types of research: - Descriptive

Types of Data: - Secondary Data

Sources of Data: - Internet

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 About Tata Motors

Tata Motors is India's largest automobile company, with consolidated

revenues of Rs. 92,519 crores ($ 20 billion) in 2009-10. Through
subsidiaries and associate companies, Tata Motors has operations in the UK,
South Korea, Thailand and Spain. Among them is Jaguar Land Rover, the
business comprising the two iconic British brands. It also has an industrial
joint venture with Fiat in India. With over 5.9 million Tata vehicles plying in
India, Tata Motors is the Country’s market leader in commercial vehicles
and among the top three in passenger vehicles. It is also the world's fourth
largest truck manufacturer and the second largest bus manufacturer. Tata
cars, buses and trucks are being marketed in several countries in Europe,
Africa, the Middle East, South Asia, South East Asia and South America.

31
 TATA nano

2007 saw record livrmber of road accidents in Delhi involving blue

hne buses. One such accident involved a scooter in which both the driver
and the pillion rider died on the road even before they could be taken to the
hospital. This led to protests and violent demonstrations against blue line
buses. The Supreme Court of India stepped in to ask Delhi Government on
the action it took against erring bus drivers and owners. Two wheeler
accidents are quite common in India. A study at Apollo Hospitals in India
showed mat 1,20,000 head injury deaths occurred annually in the country
from twowheeler accidents alone and that such head injuries were the sixth
leading cause of death in India (One death every 4 minutes). However these
statistics never reveal the agony and misery faced by the family when the
breadwinner is critically injured or dies. This study also showed that two

32
wheeler riders were five times more likely to be killed in an accident than
car or bus passengers.

Earlier in 2003, Mr.Ratan N. Tata or RNT as he is affectionately called,

Chairman Tata Group, described one of the regular sights on Mumbai roads.
A family of four - husband, wife and two children -precariously balanced on
a two- wheeler driving on Mumbafs roads especially during the monsoon.
He often wondered about their safety and what he and his Tata Motors could
do to give them a safe vehicle. The two-wheelers are a relatively unsafe
mode of transporting a family. This two-wheeler image got Mr .Tata
thinking on safer forms of personal transport Further, he always had an
unconscious urge to do something for the large'majority of Indians.

33
 HISTORY

The introduction of the Nano received media attention due to its

targeted low price. The Financial Times reported: "If ever there were a
symbol of India's ambitions to become a modern nation, it would surely be
the Nano, the tiny car with the even tinier price-tag. A triumph of
homegrown engineering, the $2,200 (€1,490, £1,186) Nano encapsulates the
dream of millions of Indians groping for a shot at urban prosperity." The car
is expected to boost the Indian economy, create entrepreneurial-
opportunities across India, as well as expand the Indian car market by 65%.
The car was envisioned by Ratan Tata, Chairman of the Tata Group and Tata
Motors, who has described it as an eco-friendly "people's car". Nano has
been greatly appreciated by many sources and the media for its low-cost and
eco-friendly initiatives which include using compressed-air as fuel and an
electric-version (E-Nano). Tata Group is expected to mass-manufacture the

34
Nano, particularly the electric-version, and, besides selling them in India, to
also export them worldwide.

Critics of the car have questioned its safety in India (where reportedly
90,000 people are killed in road-accidents every year), and have also
criticised the pollution that it would cause (including criticism by
Intergovernmental Panel on Climate Change chairman Rajendra Pachauri).
However, Tata Motors has promised that it would definitely release Nano's
eco-friendly models alongside the gasoline-model.

The Nano was originally to have been manufactured at a new factory

in Singur, West Bengal, but increasingly violent protests forced Tata to pull
out October 2008, (See Singur factory pullout below.) Currently, Tata
Motors is reportedly manufacturing Nano at its existing Pantnagar
(Uttarakhand) plant and a mother plant has been proposed for Sanand
Gujarat. The company will bank on existing dealer network for Nano
initially. The new Nano Plant could have a capacity of 500,000 units,
compared to 300,000 for Singur. Gujarat has also agreed to match all the
incentives offered by West Bengal government.

35
DEVELOPMENT OF A ONE LAKH CAR

Soon after this announcement, a team of engineers got together to

actualize this dream. At that time they did not realize that the next four years
of their lives would be totally spent on this project. They were not allowed
to share with anyone, even their wives, the developments on the project.
Several ideas were explored. Initially, the thought was to make a low-end
'rural car', probably without doors or windows and with plastic curtains that
rolled down-a four-wheel version of the auto rickshaw.

As Jai Bolar, Senior Manager for development at Tata Motors

Engineering Research Centre recalled they considered all other low cost
modes of transport, which included two wheelers, auto rickshaw and the
company's own low priced Indica car. They had no clue as to what they were
supposed to do. So the engineers decided to ask RNT who exhorted them to
dream of building a low-cost car that would cost marginally more than the
two wheelers and revolutionize personal transport in India. "Go beyond just
the usual cost reduction exercise. Show the world the ingenuity of Indian

36
engineers" said RNT urging them to include him in their team. "Only
countries like India or Pakistan can make such a low cost car in the world",
concluded RNT.

These words of RNT had a far-reaching effect on the product

development team. Over the next 18 months or so, the team had little or no
breakthroughs. It tried to globally source components and even toyed, as
mentioned above, with an open car with plastic or canvas sheet for
protection. In all their ideation, they were still working on making the two-
wheeler a safe drive. "No brief and benchmarks only made the challenge
tough", commented Bolar. At this time in August 2004, Girish Wagh, a 35-
year-old engineer of a track record of breaking new grounds joined the team.
He had earlier successfully made a "mini truck", Ace in a very tight cost
schedule. Wagh was known for his innovative approach of involving
customers in product development. Recalling his Ace experience, Wagh
remembered how he talked to customers who were mainly three wheeler
drivers driving around in rural areas and towns carrying poultry, vegetables
and other groceries.

37
 All of them wanted a cheap, dependable truck that could go from
village to market carrying the produce. One night, reminisces Wagh, as
sunset approached, he persisted with one rickshaw driver on probing why he
needed a four-wheeler when the same purpose was achieved with the three-
wheeler. After a long persistent query, this driver said "If 1 had a four-
wheeler, I would have better marriage prospects in my village. Three-
wheeler drivers are looked down upon in my village". Wagh got his
response - four wheels had emotional and social appeal and not just the
rational appeal. In May 2005, when Tata Motors launched this "mini truck"
branded "Ace" at just $5,100, it became a roaring success. The company
sold 100,000 vehicles in 20 months.

So, Wagh told the car team that Indians wanted to graduate from two
wheelers to four wheelers for emotional reasons. And the "average Indian"
cannot afford expensive fourwheelers. Wagh joined the team when the first
'mule,' was ready. In automobile manufacturing, 'mule' is a vehicle that
comprises the engine and transmission, driving a mock-up addled with
electronic sensors. It moves like a vehicle but only for testing purposes. The
first 'mule' had a marine engine with 20 bhp (brake horse power). The team
wanted to know if such an engine worked. Another pioneer on the team was
Narendra Jain who is credited with the first gasoline engine made by Tatas.
Jain searched globally for an engine that could fit a small car. He even
contemplated the engine of the two-wheeler but gave up, as it didn't produce
RNT's dream car for the average Indian.

He then started designing the engine afresh. His first product was one
that delivered 20 bhp but that was not sufficient. He increased the engine's

38
capacity to 554 cc, which delivered 27 bhp. But it still did not have the
required power .The process went on till the capacity of 586 cc was reached.
The engine appeared to have the zing to satisfy all parameters namely low
cost and acceptable performance and conformed to all current and potential
regulatory requirements. The product development team had now swelled to
500 as new tasks were incorporated.

While Tata engineers worked on the engine design & car engineering,
Italian design house I.D.E.A * was mandated with styling. This design house
had earlier designed Tata's Indica. RNT was personally involved in styling.
As Wagh mentioned, RNT even made last minute changes to the style, as his
concern was always the customer.

In December 2005, the second mule was tested and by mid 2006 the
first prototype or Model Alpha was ready. After testing it on 586 cc engine,
the team found the car wanting. It needed more length. RNT also wanted
changes in styling, which involved body design and increased safety
performance. The team was back at the drawing board. No benchmarks was

39
making the task difficult and often frustrating. The top leadership, involving
Mr.Ravikant, Managing Director, was tasked to continuously motivate the
team. He mentioned that the company continuously exposed the team to
competitor products from all over the world, even tearing them apart. In
designing a breakthrough product, sometimes the work can become
repetitive and tedious. For example in the task of engine designing Jain did
150 thermodynamic simulations, each of them stretching from 8 to 10 hours.
Another expert, R.G.Rajhans, had built the body of Indica and by this time
built about 10 different floors for this dream car. And finally in October
2006, Jain built a 624 cc engine with a bhp of 34. This was an optimal
design. "First time a high pressure die cast engine was made in India", said
Jain. Compared to the first Maruti 800, which delivered 37 bhp, Jain's
engine was more optimal. It was cast into a real engine in January 2007
when it was first tried. It had a multipoint fuel injection system developed by
Bosch. The heart of the dream car was now ready.

But the company had still to cover many more miles. Components
were critical and vendors played a significant role, in determining costs of
any automobile. Tata's Head of Sourcing was one E.Balasubramaniam, who
was greatly respected by vendors. He negotiated, held the hand and prodded
vendors to go down on their cost curves. This involved vendors having to
pare their margins and produce at substantially low cost. The vendors
needed to invest in processes and methods to reengineer their products to
specifications rigidly guided by cost. Breakevens were expected only after
two or three years. Another problem was getting vendors to put up a shop in
Singur* in West Bengal where Tatas had decided to make this car. The

40
vendors so far were clustered in and around Delhi, Mumbai, Pune and
Chennai. Further it wasn't just the costs but all components including seats
and batteries that required reengineering.

This obviously increased the investment of a component manufacturer

in some cases by about 40-50%. But the results of this creative thinking
were amazing. For example, Tata Engineers found that door handle had 70
percent less parts than one of the cheapest European cars. Another major
component is steering shaft. Hollow steering shafts reduced further costs and
weight. MRF, a leading tyre manufacturer, redesigned the tyre to bear extra
weight on the rear wheels. Thus at every stage the goal was to cut costs by
reducing the number of parts that went into each component.

As some managers mentioned they were amazed how in some cases

costs dropped as high as 60% just by reengineering and out of box thinking.
The team now was seeing the dream come through. But outside the factory
criticism and skepticism persisted. Concerns about pollution, road

41
infrastructure and clogging up of cities in India were major issues that critics
raised. But Tata was undeterred. He wanted his car to conform to the stiffest
pollution control norms in the world. He firmly believed that his car would
not only create and develop the Indian market but also provide a solution to
the harassed low income class and those at the cusp of middle class who
suffered daily the agony of undependable public transport and/or unsafe two
wheeler ride. Finally, in Jan 2008 the car named Nano (because of its size
and cost) was ready to be showcased to the world. Some vital statistics of
Nano are shown below:

42
Parameters Statistics

Total investment Rs. 1700 crores* or Rs. 17000 million

Engine 624cc, 3f4bhp rear-mounted

Design Four-door monocoq ue

Fuel efficiency 2Qkpl

Top speed 105 kmph

Gearbox Fon-spfed manual

Length 8 per cent smaller thanMaruti 800

Inner space 21 per cent larger than Ma lit i 800

Safety Sit vivejd frontal crash at 48 kmph

Emission Bharat III and Euro IV complaint.

43
 DESIGN

A Tata Nano in silver

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
development has been tempered by the company's success in producing the
low cost 4 wheeled Ace truck in May 2005.

Contrary to speculation mat 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."

44
 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. Many 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
conmtioning, power windows, and central locking. Tata has set its initial
production target at 250,000 units per year.

45
 COST CUTTING FEATURES

A manufacturing strategy is a pattern of decisions, both structural and

infrastructural, which determine the capability of a manufacturing system
and specify how it will operate to meet a set of manufacturing objectives
which are consistent with overall business objectives. Manufacturing has
now become a necessity for maintaining competitive pricing and appropriate
times to market. The company must decide what its manufacturing strategy
will be throughout the product life cycle. A product that will be sold into an
already established market, with an accepted technology will have different
manufacturing needs than a new product with a new technology in the
market. Tata's Nano is a new product with a new technology which promises
the market of an efficient car with a very low cost. Let see the
Manufacturing stunts it has used to cut down cost.

 The Nano's dickey (boot/trunk) does not open. Instead, the rear seats
can be folded down to access the dickey.

 It has a single windscreen wiper instead of the usual pair.

 It has no power steering.

 In Base model it has three lug nuts on the wheels instead of four.

 It has only one side view mirror.

New Market Segment

What Tata is doing is creating a whole new segment and getting the
first mover advantage. They are making the maximum profits by penetrating

46
in the mass market. They found standardization is best way to make cars
cheaper and assembled cheap units in their final product which could
therefore be afforded by middle class families. Brand Image Tata is taking
the advantage of their brand image and has cut down on all gizmos in the
car. Take an example of cars made in 50's and 60's when cars were like
bicycles... a means of transportation and not a living room. They may also
want to introduce version that has only one bench seat instead of trying to
create vehicle for six people. Purchasing also plays a big role in cost control.
They plan to introduce open and transparent bidding process to avoid
corruption in purchasing.

Usage of Composite material

There is more usage of plastic and composite materials which will cut
down manufacturing cost. Increased use of plastic components can reduce
the overall weight of a car by as much as 40 percent, which can go a long
way in improving fuel efficiency. In addition, the cost of tooling plastic is
half that of a conventional metal-based tooling system.

Distributed manufacturing

A distributed manufacturing system refers to a control system, in

which the controller elements are not central in location but are distributed
throughout the system with each component subsystem controlled by one or
more controllers. The entire system of manufacturing is connected by
networks for communication and monitoring. Tata Motors is studying the
possibility of letting local assemblers produce its low-cost small car, the
Nano, and selling it under their own brand. Tata is changing India's

47
manufacturing practices. That's because the auto maker is asking engineers
and mechanics to join together to set up their own assembly operations to
build the Nano. Tata not only will supply complete-knocked-down kits but
also provide the entire assembly plant, at what it says to be the most
economical price. The auto maker will monitor the quality and reliability of
the assembly operation, taking full responsibility for product liability. Using
this strategy, Tata expects to make and sell 250,000 cars in the first year and
up to 1 million annually in the next three to four years.

Tata Motors is going all out to strengthen its distribution channels so

that the people's car would be a success. It is being said that Tata Motors is
going ahead with its distribution and financing plans for the Nano car. Tata
Motors is implementing a 'hub-and-spoke' model for Nano's distribution,
which would mean that it would involve increasing dealership points as well
as adding sales and customer touch points. As per the plan, the Tata Nano
dealers in the cities would play the role of hubs. They in turn will undertake
the effectiveness of other sales and customer touch points, which would play
the spokes. In terms of manufacturing strategy - the possibility of the 1 -lakh
cars final assembly being done at the dealer point is truly path breaking.

Economies of scale

Economies of scale are the cost advantages that a business obtains due
to expansion. They are factors that cause a producer's average cost per unit
to fall as scale is increased. Economies of scale may be utilized by any size
firm expanding its scale of operation. The common ones are purchasing
(bulk buying of materials through long-term contracts), financial (obtaining
lower-interest charges when borrowing from banks and having access to a

48
greater range of financial instruments), and marketing (spreading the cost of
advertising over a greater range of output in media markets). Each of these
factors reduces the long run average costs (LRAC) of production by shifting
the short-run average total cost (SRATC) curve down and to the right. Tata
is counting on this economies of scale and "careful sourcing of materials" to
keep prices down.

49
 PRICE STRATEGY

MODIFYING THE TRADITIONAL PRICING SYSTEM

Tata is also working on the strategy of reducing costs and waste to

improve profits by implementing a new style of pricing than the traditional
way of pricing of automobiles.

Traditional way: -

(Cost plus, cost price + a markup over cost price = SP and the markup
is their profit).

Tata Nano strategy is cost minus (SP-cost = Profit). More cost

reduction means more profit. This means Tata's will continue to squeeze
suppliers.

These unusual manufacturing strategies will enable Tata to meet

increasing demand. Thus all these strategies contribute to the lowest possible
price showcasing Nano - Small Car Big Dreams!

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 22 March 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:

50
  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

MARKET STRUCTURE

There are four basic types of market structures under traditional

economic analysis which are:-

 A Perfect competition is a market where there are many small firms

producing homogeneous goods.

 A Monopolistic competition prevails where there are a large number

of independent firms which have a very small proportion of the
market share.

 An Oligopoly is a market dominated by a few large suppliers. The

degree of market concentration is very high.

 A Monopoly is a market structure is which a single supplier produces

and sells the product.

The elements of Market Structure include the number and size

distribution of firms, entry conditions, and the extent of differentiation. The

51
main criteria by which one can distinguish between different market
structures are: the number and size of producers and consumers in the
market, the type of goods and services being traded, and the degree to which
information can flow freely. Automobile industry in itself is a differentiated
oligopoly market. In differentiated oligopolies companies attempt to
differentiate their products from those of their competitors. Essentially,
Oligopolies have a few key players in an industry that can cooperate to
effectively form a monopoly or at least approach the level of a monopoly.
Automobile industry typically has barriers to entry which deter newcomers
from starting up businesses, keeping the market small. In the case of an
automotive company, costs are a large barrier. Who exactly has the money
to throw around on a factory, national advertising, labor pool with benefits,
repair structures and mechanical warranties etc will jump in an automobile
industry. But the case of Tata Nano is different in terms of its price.
Currently it clearly enjoys clear monopoly in the world market.

Let us see how. If there is a single seller in a certain industry and there
are no close substitutes for the goods being produced, then the market
structure is that of a "pure monopoly". A monopoly should be distinguished
from a cartel in which several providers act together to coordinate services,
prices or sale of goods. Although there are innumerable small car
manufacturers, currently Tata Motors Ltd. long-awaited Nano the "people's
car" stands out as the only car manufactured around the globe with the
cheapest price. Tata says it has filed 34 global patents for the vehicle's
platform.

52
 A monopoly is said to be coercive when the monopoly firm actively
prohibits competitors from entering the field. Economic barriers include
economies of scale, capital requirements, cost advantages and technological
superiority. Monopoly is the result of access to key resources, which may be
either natural resources or some patented process or special knowledge. New
firms cannot enter the industry without access to those resources. The Nano
technology which includes the above factors will make it difficult for new
entrants. A monopoly is a price maker as it holds a large amount of power
over the price it charges. Tata Nano is the only car in the world which has
been priced with a starting rate of Rs.l 34000.00 for the Base model and
Rs.160000.00 & Rs.185000.00 for the CX & LX model respectively. An
existing competitor is the Maruti 800 which is trusted and consumed by a
big share of Indian market. Although Nano is cheaper than the Maruti 800,
its main competitor which is next cheapest Indian car priced at 1,84,600.00
Rupees, Maruti 800 is the car which is around for many years and is still
going strong. Maruti Suzuki will most probably bring down the price further
to attract the customers. There are also rumors of Maruti Suzuki introducing
a lower priced version of Alto to counter Tata Nano. Customer votes say this
car is much more reliable than Nano as it is the best one can say for the city
rides and easy to maintain in traffic. But still Nano proves to be better. Nano
is 8 percent smaller in exterior size and has 23 percent larger interior space
in comparison to Maruti 800. Now news is spread about the RENAULT
YENI. RENAULT YENI will be launching in India in collaboration with
Mahindra. This Car is launching in India only for Rs 1, 30,000. Now how far
this car proves to be a truth or a myth depends. But if it is a truth than the

53
competition for Nano from RENAULT YENI will be much more than the
Maruti 800. Besides 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.

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, fabric seats 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.

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.

54
 TECHNICAL SPECIFICATIONS

The interior

According to Tata Motors, the Nano is a 35 PS (26 kW; 35 hp) car

with a 624 cc rear engine and rear wheel drive, and has a fuel economy of
4.55 L/100 km (22 km/L, 51.7 mpg (US), 62 mpg (UK)) under city road
conditions, and 3.85 L/100 km on highways (26 km/L, 61.1 mpg (US), 73.3
mpg (UK)). It is the first time a two-cylinder non-opposed petrol engine will
be used in a car with a single balance shaft. Tata Motors has reportedly filed
34 patents related to the innovations in the design of Nano, with the
powertrain accounting for over half of them. The project head, Girish Wagh
has been credited with being one of the brains behind Nano's design.

55
 Much has been made of Tata's patents pending for the Nano. Yet
during a news conference at the New Delhi Auto Expo, Ratan Tata pointed
out none of these is revolutionary or represents earth-shaking technology. He
said most relate to rather mundane items such as the two-cylinder engine's
balance shaft, and how the gears were cut in the transmission.

Though the car has been appreciated by many sources, including

Reuters due to "the way it has tweaked existing technologies to target an as-
yet untapped segment of the market", yet it has been stated by the same
sources that Nano is not quite "revolutionary in its technology", just low in
price. Moreover, technologies which are expected of the new and yet-to-be-
released car include a revolutionary compressed-air fuel system and an eco-
friendly electric-version, technologies on which Tata is reportedly already
working, though no official incorporation-date for these technologies in the
new car has been released.

According to Tata, the Nano complies with Bharat Stage-HI (similar

to Euro-Ill) and can also meet Euro-JV emission standards. Ratan Tata also
sad, "The car has passed the full-frontal crash and the side impact crash'.
Tata Nano passed the required 'homologation' tests with Pune-based

Automotive Research Association of India (ARAI).This means that

the car has met all the specified criteria for roadworthiness laid out by the
government including emissions or noise & vibration and can now ply on
Indian roads. Tata Nano managed to score 23.6 km per litre during its
'homologation' tests with ARAL This makes Tata Nano the most fuel
efficient car in India. Nano will be the first car in India to display the actual
fuel mileage figures it recorded at ARAI's tests on its windshield. According

56
to ARAI in the tests the Nano conformed to Euro IV emission standards
which will come into effect in India in 2010, yet it was only homologated to
the Euro III level.

REAR MOUNTED ENGINE

The use of a rear mounted engine to help maximize interior space

makes the Nano similar to the original Fiat 500, another technically
innovative "people's car". A concept vehicle similar in styling to the Nano,
also with rear engined layout was proposed by the UK Rover Group in the
1990s to succeed the original Mini but was not put into production. Once the
project was taken over by BMW, the new Mini was much larger and
technically conservative. The independent, and now-defunct, MG Rover
Group later based their Rover City Rover on the Tata Indica.

Tata is also reported to be contemplating offering a compressed air

engine as an option.

57
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 overhead camshaft
• Compression ratio: 9.5:1
• bore x stroke: 73.5 mm (2.9 in) x 73.5 mm (2.9 in)
• Power: 35 PS (26 kW; 35 hp) @ 5250 rpm
• Torque: 48 N-m (35 ft-lbf) @ 3000 +/-500 rpm
Layout and o Rear wheel drive
Transmission • 4-speed manual transmission
Steering o mechanical rack and pinion w/o servo • Turning radius: 4
metres
Performance • Acceleration: 0-60 km/h (37 mph): 8 seconds Q Maximum speed:
105 km/h (65 mph)
• Fuel efficiency (overall): 23.6 kilometres per litre (4.24 litres per
100 kilometres (66.6 mpg.jmp; 55.5 mpg. us»
Body and • Seat belt: 4
dimensions • Trunk capacity: 150 L (5.3 cu ft)
Suspension, Tires & • Front brake: 180 mm drum
Brakes • Rear brake: 180 mm drum
• Front track: 1,325 mm (52.2 in) « Rear track: 1,315 mm (51.8 in)
• Ground clearance: 180 mm (7.1 in)
• Front suspension: McPherson strut with lower A arm
© Rear suspension: Independent coil spring
• 12-inch wheels

58
Supplier Part/system

Tex spin Clutch Bearings

Bosch Gasoline injection system (diesel will
follow), starter, alternator, brake system
Continental AG Gasoline fuel supply system, fuel level
sensor
Caparo Inner structural panels
HSI AUTO Static sealing systems (Weather Strips)
Delphi Instrument cluster
Denso Windshield wiper system (single motor
and arm)
FAG Kugelfischer Rear-wheel bearing
Ficosa Rear-view mirrors, interior mirrors,
manual and CVT shifters, washer system
Freudenberg Engine sealing
GKN Driveshafts
INA Shifting elements
ITW Deltar Outside and inside door handles
Johnson Controls Seating
Mahle Camshafts, spin-on oil filters, fuel filters
and air cleaners
Saint-Gobain Glazing
TRW Brake system
Ceekay Daikin/Valeo Clutch sets
Vibracoustic Engine mounts
Visteon Air induction system
ZF Friedrichshafen AG Chassis components, including tic rods
Behr HVAC for the luxury version
Durr Lean Paint Shop

59
 VARIANTS

Besides fee regular and conventional petrol-variant, the following variants

are also expected:

Diesel

A website has reported that the Tata Nano might be made available with a
690cc diesel engine by September 2010. Tata motors have not confirmed
this yet have hinted that a diesel version will be introduced in the future. "As
of now the Diesel variant is not offered. It will be offered only in Petrol
now"

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.

60
Electric drive train or electric-version

Tata is also believed to be making an electric version of the Nano,

called the E-Nano (reportedly with attached or sideby solar panels as well)
which might well turn out to be the "world's cheapest electric car" which is
more eco-friendly and has many enthusiasts and media for its support. It's
supposed to be as cheap as the conventional gasoline version. Tata is making
the Nano compliant with export market regulations and plans to export such
a car worldwide, particularly to the UK and the rest of continental Europe,
the US, and Australia.

The Economic Times reported that the "electric Nano" "would still
make good sense for economic, clean and green personal mobility in
countries around the world." According to the Hamburg-based newspaper,
Auto Bild, the E-Nano would be built in cooperation with the Norwegian
electric car specialist, Milj0bil Grenland AS.

Hybrid
Leftlanenews reported that "a hybrid version [of Tata Nano] is also
likely, although it is not yet known whether the electric motor will be paired
with a gasoline or diesel version."
Nano Europa
Tata Motors unveiled a version of the Nano mini-car called the Nano
Europa at the 2009 Geneva Motor Show. The car will be coming to
mainland Europe and the UK and will have a number of improvements over
the standard Nano. The Nano Europa has an increased wheelbase, a new 3-
cylinder engine and improved interiors and exteriors. The Nano Europa will
be more expensive, heavier, and less fuel economical than the standard Nano
with prices said to be around the US$ 6000 mark.

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Modified Version of Tata Nano, named as Tata Pixel which is to be
launched in the European Market by Tata Motors.

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.

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The Tata Pixel’s ability to manoeuvre and park in the tightest of spaces is
made possible by its Zero Turn toroidal traction-drive Infinitely Variable
Transmission (IVT), which assists rotation of the outer rear wheel forwards
and the inner rear wheel backwards, while the front wheels turn at acute
angles. The result is a turning circle radius of just 2.6 metres. The 'scissor'
doors rotate upwards from the front to allow passengers to effortlessly enter
or exit the Tata Pixel, even in the tightest of spaces.

A forward sweeping roofline, with minimal front and rear overhangs,

accentuates the youthful styling. The Tata Pixel is also designed to provide a
high level of connectivity. Key functions are controlled by the driver’s smart
phone, running ‘My Tata Connect’ -- the first integrated human-machine
interface (HMI) concept from Tata Motors.

A 1.2 litre three-cylinder turbocharged diesel engine, positioned at the rear

of the Tata Pixel, gives lively performance. The engine is a low-friction
design, featuring variable coolant and oil pump and rapid warm-up
technologies. With optimised aerodynamic drag, low rolling-resistance tyres,
stop-start technology, and intelligent battery charging, the Tata Pixel returns
European combined cycle (NEDC) fuel economy of 3.4 l/100km and CO 2
emissions of just 89g/km.

Taking its pursuit of electric vehicles forward, Tata Motors is also

displaying the Tata Indica Vista Electric Vehicle at the Motor Show’s Green
Pavillion. The Tata Indica Vista EV will be made available to fleet

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customers this summer in the UK. The four-seater family car has a predicted
range of up to 160 km.

The Tata Indica Vista EV bagged two trophies for its performance at the
Royal Automobile Club’s Brighton-to-London Future Car Challenge. A
special version, the Tata Indica Vista EVX, participated in the Progressive
Insurance Automotive X Prize contest, one of the world’s most prestigious
events for environment-friendly vehicles.

The Company’s displays also include the Tata Aria, the first Indian four-
wheel drive crossover, which was launched in India recently to rave reviews,
the Tata Indigo Manza, among India’s best selling sedans scheduled for
launch this year in select countries, and the Tata Indica Vista, a top selling
hatch already launched in select geographies. In Europe, the Indica Vista has
already been introduced in Poland and Italy, and is planned for launch in
Spain. The Tata Aria too will be launched, further enhancing the Company’s
portfolio in these markets.

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 PROMOTION AND DISTRIBUTION OF
TATA NANO

Enough use of one of the most important element of promotion mix ,

publicity reduces the necessity of other promotional devices for nano. Nano
got publicity in the following ways:-

 Publicity as "One lakh car" by mouth to mouth.

 Auto expo 2008,New Delhi & Geneva

 Publicity through print & electronic media

 Singur violation.

For other type of promotional activities, cost factor that is 1 lakh price
tag is to be keep in mind, TATA is going to launch its nano mobile for
indicom user, nano watches, nano T-shirts available in Westside stores.

ADVERTISING

TV & other mass media will be less effective, thus too much money
will not be invested in this regard Mainly word of mouth advertising will get
more emphasis.

COMMUNICATION STRATEGY

Tata has innovate communicated with whole work about their new
product called tata nano in a effective way through:

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  Media

 Trade shows and auto shows

 Internet

 Mainly from word of mouth

 Pre launching the Tata nano

They have raised the curiosity all over world by just publishing that it is a 1
lakh car and world's cheapest car.

67
 INTERNET MARKETING PROGRAM IMPLEMENTATION
Internet Marketing is one of the most important aspects of an effective
website. Internet Marketing is the piece of the puzzle that joins your
development efforts with actual sales.

Online buzz:-

Nano has gone beyond the traditional methods of advertising and

promotion online.

Social Media communities;-

 Official Orkut community o Official Facebook Group

 Highest View Count on You Tube- 303,006 (it was just under
3,00,000 when 1 began writing this post)

 No. of Blog Posts - 61,664

 TATA has a blog on the official website where they have been
discussing quite interesting topics and generally maintaining an active
community.

 Advertising:- TV & other mass media will be less effective, thus too
much money will not be invested in this regard . Mainly word of
mouth advertising will get more emphasis.

Internet will be a major media for advertising Tata motors have

created a special website for tata nano car. There are several listing in all the
major car sites like autocar.com.

SMS marketing - advertising through sending text message. Using the

existing database of targeted customer.

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Trade shows - A trade fair (trade show or expo) is an exhibition organized
so that companies in a specific industry can showcase and demonstrate their
latest products, service such as auto expo and auto fair.

Program launch - special launching of nano was done in auto expo held in
India last year creating a hype was good medium

Tata Motors is going ahead with its distribution and financing plans
for the Nano car. Besides, the car maker is also given a thrust to the retail
and finance models too, Tata Motors is implementing a 'hub-and-spoke'
model for Nano's distribution, which would mean that it would involve
increasing dealership points as well as adding sales and customer touch
points.

Tata Motors has dealerships based in bigger cities will be responsible

for looking after these touch points, which could be located even in the
remotest corners of the country. Tata Nano dealers in the cities would play
the role of hubs. They in turn will undertake the effectiveness of other sales
and customer touch points, which would play the spokes.

Tata Motors has reportedly decided to focus on semi urban and rural
markets to sell the people's car.

The Tatas are also going in for mass production of the Nano and this
is expected to be done very soon. Though work at Singur has come to an
almost standstill, it is expected that Tata Motors will be able to keep its
promise for launching the Nano at the price that it promised, on the
promised deadline. The Singur faciliy, located around 40 kilometers away
from Kolakata, has been seeing ryots on the war path with the government
being urged to return the 400 acres of land taken away from them for the
plant.

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 Marketing Mix

PRODUCT
Tata has a very wide range of products it has passenger cars, utility
vehicles, Trucks, Commercial passenger Carriers and Defence Vehicles.

 Nano received media attention due to its targeted low price.

 The Tata Nano is a rear-engine, four passengers, city car built by Tata
Motors,

 It was first presented at the 9th annual Auto Expo on 10 January 2008,
at Pragati Maidan in New Delhi, India.

 From Singur to Pantnagar (Uttakrkhand)

 aimed primarily at the Indian market.

PRICE
The prices of Tata motors are generally affordable acceptable by the
general public at large. Tata always have something for the lower class
people with Nano being their trump card. Giving discount every month and
special promotion for certain type of vehicle also one of the strong strategy
use by Tata Motors. Discount can be made from Company's profit or from
dealer's profit at certain range.

 Penetration pricing

 Low pricing policy with minimum profit margin

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  Though the one lakh price tag is not fixed by TATA group, it was the
word of mouth of people which fixed that range. This expectation of
people creates a big challenge for the company.

PLACE

Tata Motors has an extensive dealer network covering Indian and

International markets. Wherever you are, there is a Tata Motors Sales and
Service dealership close to you. The channel of distribution, physical
location, and dealership method of distribution and sales is generally
adopted. The distribution of vehicle must be in a very systematic way, from
the plant to dealership and to end user. This is not only in India itself but
also to the world-wide dealership.

PROMOTION

Tata motors promote their products via Advetising and after sales
services.

 Enough use of one of the most important element of promotion mix,

publicity reduces the necessity of other promotional devices for nano.

 Publicity as "One lakh car" by mouth to mouth

 Auto expo 2008, New Delhi & Geneva

 Publicity through print & electronic media

 Singur violation

PEOPLE

Tata Motors owe our success to the highly motivated and talented
staff. Our recruitment division picks the creme-de-la-creme from premier

71
universities, management and engineering institutes in India. They put them
through rigorous training programmes to hone their entrepreneurial skills
and impart comprehensive product knowledge.

PROCESSES

Tata motors follow Balanced Scorecard Collaborative, Inc for

achieving excellence in overall Company performance.

PHYSICAL EVIDENCE

The management of the company has managed to keep their hopes alive
even in this recession and hopes that the worse is behind Tata Motors
recently launched the most awaited car of the year, Tata Nano and the
company has already received 203,000 booking that are fully paid and 70
percent of the applicants are ready to wait till the end of 2010 for the car to
be manufactured.

Expectations

According to one report, India as well as other nations, such as

European nations, have great expectations from the Nano and are keenly
awaiting it, especially the electric version of the Nano, making it in all
probability the "world's cheapest electric car" officially on record. The car
itself is expected to boost the Indian Economy as well as expand the Indian
car market by 65%, according to rating agency CRISIL.

The Nano, already in production, has already been listed in the

Guinness Book of World Records as the world's cheapest car.

Potential effect on Indian economy

72
The 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. "

Comparison to the Model T

Many have compared the Nano with Henry Ford's Model T built a
century earlier, in 1908. While the Model T initially cost $850 (equivalent to
$20,091 today), Ford refined the assembly line process and by the 1920s, the
price of Ford's Model T had fallen to $290 (equivalent to $3,191 today),
comparable to the release price of the Nano at US$2,171 as of October 2009.

Livemint said:

"Ford Motor Co. is rich because Henry Ford used the assembly-line to
produce the Model T in 1908. Ratan Tata is a late entrepreneur, making the
Nano in 2008.

India is 100 years behind. But we are waking up to the possibility of

catching up. I just hope our planners wake up soon. "

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Times of India also compared the Nano to the Model T

"This raises the question: How have the Tatas accomplished such a
task? Pursuing this question a fascinating story unfolds that reminds one of
Henry Ford's Model T that was built exactly one hundred years ago
(September 1908). Ford wanted to make a car for the multitude, not for the
elite, with the best material and the best design that the technology of his
time could devise, and he wanted to make it, above all, at a price that was
affordable. This is the example that Ratan Tata has followed with
determination. When he announced the price of his car in an interview to the
Financial Times during the Geneva Motor Show, his colleagues were
'aghast', but he had set his goal.

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 sell 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 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.

74
 On December 4, 2006 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 24 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.

75
Criticism, issues and problems

Questions of safety

The Times says:

"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 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.

76
Mass motorisation

As the Nano was conceived and designed around introducing the

automobile to a sector of the population who are currently using eco-friendly
bicycles and motorcycles, environmentalists are concerned that its
extraordinarily low price might lead to mass motorization in countries like
India and therefore possibly aggravate pollution as well as increase the
demand for oil. The ecology focused German newspaper die tageszeitung
feels that such concerns are "inappropriate" as the Tata Nano has lower
emissions compared to the average Volkswagen, and that developing
countries shouldn't be denied the right to motorized mobility when
industrialized countries should be looking to reduce their emissions and
usage of cars. Die Welt reports that the car conforms with environmental
protection, and will have the lowest emissions in India.

In crowded metropolitan cities like Mumbai, Ratan Tata has

conceived a scheme to only offer the Nano to those individuals who do not
have an automobile already. 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.

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

77
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 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".

Spontaneous fire

There have been three cases of spontaneous fires occurring inside the
Nano. The fires have been traced to a short circuit in the combination switch
that controls the headlights, windscreen wipers and indicators located in the
steering column. Technical experts have also blamed the placement of the
battery for contributing to overheating in the wires, the failure of the circuit
breaker in tripping during a short circuit episode, and the failure of the fuse
to melt when excessive amperage (resulting from a short circuit condition) is
detected in the circuit leading to heated wires.

78
79
 TARGET MARKET AND COMPETITION

Executive two wheeler people - people that are working professionals but
can not afford to buy a three lakh car which is the average cost of a small car
in India

Second hand car user - those people that cannot afford to buy a new car.
Now they will be able to buy a new car cheaper then they buy a used car for.

A11 to rickshaw market - most of the Auto rickshaws also cost same as the
price of Nano. This may help the Nano to replace them as well

Middle and lower income group people - these are the people that are
growing and are becoming a little richer which is making them afford a car.

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 CONCLUSIONS

 To make Tata Nano a cheaper car, the foremost strategy adopted by

Tata Motors was to minimize its manufacturing cost.

 Penetration pricing, Low pricing policy with minimum profit margin

are the pricing strategies for Tata Nano.

 Tata Motors did not spend much on its promotional activities. It

normally got publicity as "one lakh car" by mouth to mouth, Auto
expo 2008 New Delhi & Geneva, Publicity through print & electronic
media and Singur violation.

 The target market are Executive two wheelers people, Second hand
car user, Auto rickshaw market, Middle and lower income group
people.

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 LIMITATIONS

Although proper care has been taken to keep the project report
unaffected of any inconsistency, if any occurs kindly ignore it.

Below are some of the limitations that this report suffer from :

❖ Due to time constraint it is very much payable that some aspects may
have not been properly dealt with.

❖ This report is based on secondary data and its accuracy depends on the
veracity & accuracy of the data.

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 BIBLIOGRAPHY

1. www.tatanano.com

2. www.tatamotor.com

3. www.tatapixel.com

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