INTRODUCTION

INTRODUCTION The automobile industry today is one of the most lucrative industries. Due to the increase in disposable income in both rural and urban sector and easy finance being provided by all the financial institutes, the passenger car sales have increased at the rate of 38% per annum in June 2006-07 over the corresponding period in the previous year. Further competition is heating up in the sector with a host of new players coming in and other like Porsche, Bentley, Audi, Mercedes, and BMW all set to venture in the Indian markets. One factor that could help the companies in the marketing of their product is by knowing and creating a personality for their brands. Automotive industry in India Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the Automobile Industry of India has come a long way. With HM establishing the first automobile factory way back in 1948, the Indian passenger vehicle industry was for long dominated by Ambassadors and the Premier Padminis. Then in the year 1985, following the liberalization and various tax reliefs, the Governmentt of India in collaboration with Suzuki motor corporation of Japan formed Maruti Suzuki ; a powerful alliance which changed the face of the Indian roads. The only car with the latest technology then was the Maruti 800. It became very popular because of the low price, high fuel efficiency and good reliability. Since then the market has grown with over 20 manufacturers and hundreds of models and variants. The Indian automobile industry has matured over the years and is now highly comptetitive with major Japanese, Korean, American, European and Indian companies all holding significant market shares. Indian auto industry, which is currently growing at the pace of around 18 % per annum, has become a hot destination for global auto players like Volvo, General Motors, Daimler-Chrysler,

Volkswagen, Toyota and Ford. Global players have either entered or are eyeing India as a strategic target for future development A well developed transportation system plays a key role in the development of an economy, and India is no exception to it. With the growth of transportation system the Automotive Industry of India is also growing at rapid speed, occupying an important place on the 'canvas' of Indian economy. Today Indian automotive industry is fully capable of producing various kinds of vehicles and can be divided into 3 broad categories: Cars, two-wheelers and heavy vehicles. Growth Drivers for auto industry in India

Segments of the Indian Auto market The market for any product is normally made up of several segments. A market after all is the aggregate of consumers of a given product. And, consumer (the end user), who makes a market, are of varying characteristics and buying behaviour. There are different factors contributing for varying mind set of consumers. It is thus natural that many differing segments occur within a market. In order to capture this heterogeneous market for any product, marketers usually divide or 3

disintegrate the market into a number of sub-markets/segments. This report attempts to analyze and understands how Indian carmaker have successfully segmented the market and how they are leveraging these segmentation to introduce new product and grow their market share. With proper segmentation carmakers could look at the differences among the customer groups and decide on appropriate strategies/offers for each group. These strategies then helped them in dividing the markets for conquering them. Every buyer has individual needs, preferences, resources and behaviours. Since it is virtually impossible to cater for every customers individual characteristics, carmakers grouped customers to market segments by variables they have in common. These common characteristics allowed developing a standardized marketing mix for all customers in that segment. This segmentation helped the carmaker to increase their profit by tapping the market through adapting the offer to that segment. They brought the necessary changes in the product to suit to the particular segment. We would analyze how consumer market is segmented and on what basis automaker segment the market. Consumer market segmentation 1. Geographic Segmentation. 2. Demographic Segmentation. 3. Psychographic Segmentation. 4. Behaviouralistic Segmentation. 1) Geographic Segmentation

Potential customers are in a local, state, regional or national marketplace segment. Geographic location is a major factor in segmenting target markets for automakers since their customer needs are varied for different region. The customers can be segmented based on: a. Region: - Segmentation by continent / country / state / district / city. b. Size: - Segmentation on the basis of size of a metropolitan area as per its population size. c. Population density: - Segmentation on the basis of population density such as urban / suburban / rural etc. d. Climate: - Segmentation as per climatic condition or weather. Example of Ford: - Ford has gained useful insights through segmentation and adapted its offer to suit the Indian target market. For the Indian segment Ford made some changes in its cars in comparison to their European version. Modifications such as: a. Higher ground clearance to make the car compatible to the rougher road surface in India. b. Stiffer rear springs to enable negotiating the ubiquitous potholes on Indian roads. c. Changes in cooling requirement, with greater airflow to the rear. d. Higher resistance to dust. e. Compatibility of engine with the quality of fuel available in India. f. Location of horn buttons on the steering wheel. As Indian motorists use horn far more frequently than the European where the horns are located on the lever. 2) Demographic Segmentation In this type of segmentation, the customers are segmented based on the following factors.

a. Age (dominant factor) - Segmentation is done on the basis of age of person. Car manufacturers offer a product range that caters for the needs of all phases of a customer life cycle: first car for early teens, fun-car for young professionals, family car for young families, etc. Example of General Motors:GM has identified about 40 different customer needs and correspondingly, 40 different market segments in which it would present with its vehicles. For example, it has targeted the Pontiac at active, sports-oriented, young couples, the Chevrolet at price-conscious young families, the Oldsmobile at affluent families, and the Buick at older, more conservative couples.

b. Income & Purchasing power (dominant factor) - Segmentation is done on the basis of income level of a person and purchasing power of the customer. Examples of different car segments based on purchasing power are: Budget car segment It is the largest segment in Indian market. Here the entry level starts from Rs 1.5 to 3 lakh. Maruti 800 and Omni are the dominant players in these segments. With the launch of Tata Nano with a price range of 1lakh the outlook of this segment has changed. This segment is sometimes referred to as the small car segment. Competition in this segment is extreme in Indian market. Compact car segment It lies between budget car and family car. Preferred price range is between Rs 3 to 4.5 lakh. Maruti Zen, Fiat Uno, Tata Indica, Santro, Matiz is some of the dominant players in this segment. Family car segment The purchasing capacity of buyers of this segment is somewhat higher than that of the budget and compact car segment. Price ranges between Rs 4.5 to 6 lakhs. Maruti Esteem, Daewoo Cielo,

and HM Contessa belongs to this segment. In India cars that are sold in India as Budget Car and Compact Car do not meet their purpose, especially in term of space, that they turn to the family car segment.

Premium car segment This segment represents the buyer who require true world class luxury car. Price ranges between Rs 6 to 8 lakh. Ford Escort, Honda City, Honda City, Mitsubishi Lancer, Audi 1800, Opel Astra etc are some of the major cars in this segment. Super luxury saloon segment Buyer in this segment looks for a real super premium segment car. Mercedes Benz E229, E-250, Rover Montego, Audi 6, BMW are the players in this segment. Obviously, this is a tiny segment in the Indian context.

c. Occupation. d. Gender (dominant factor):-Product can be segmented for male and female. e. Family Size. f. Family life cycle. g. Nationality. h. Religion. i. Education - Primary, High School, Secondary, College, Universities.

3) Psychographic Segmentation

Psychographic Segmentation groups customers according to their life-style and buying psychology. Many businesses offer products based on the attitudes, beliefs and emotions of their target market. The desire for status, enhanced appearance and more money are examples of psychographic variables. They are the factors that influence your customers' purchasing decision. A seller of luxury items would appeal to an individual's desire for status symbols. Psychographic Segmentation includes variables such as:-

a. Activities b. Interests c. Opinions d. Attitudes e. Values Activities, Interests, and Opinions (AIO) surveys are one tool of measuring lifestyle. 4) Behaviouralistic Segmentation Markets can be segmented on the basis of buyer behaviour as well. Since all Segmentation is in a way related to buyer behaviour, one might be tempted to ask why buyer behaviour-based segmentation should be a separate method. It is because there is some distinction between buyers characteristics that are reflected by their geographic, demographic and psychographic profiles, and their buying behaviour. Marketers often find practical benefit in using buying behaviour as a separate segmentation base in addition to bases like geographic, demographics, and psychographics.

The primary idea in buyer behaviour segmentation is that different customer groups expect different benefits from the same product and accordingly, they will be different in their motives in owing it and their behaviour in buying it. Variables of buyer behaviour are:a. Benefit sought: - Quality / economy / service / look etc of the product. b. Usage rate: - Heavy user / moderate user / light user of a product. c. User status: - Regular / potential / first time user / irregular /occasional. d. Brand Loyalty: - Hard core loyal / split loyal / shifting / switches. e. Readiness to buy. f. Occasion: - Holidays and occasion stimulate customer to purchase products. g. Attitude toward offering: - Enthusiastic Key Players in Indian Market

The largest player in the Indian industry and launched new and exciting products in the Indian markets, including the 100,000 car

The third largest passenger car manufacturer in India and one of the largest exporters of vehicles. Has established India as one of its manufacturing bases in the world. Is planning to invest heavily to boost exports from India Has vision of capturing 10 % share of the Indian passenger car market by 2010 Suzukis JV in India and the largest passenger car manufacturer in India One of the leading players in the Indian premium cars segment

One of the leading players in the Indian premium cars segment

One of the leading players in the Indian premium cars segment. GM entered the small car segment by re-launching the Matiz

One of the largest players in the UV / MUV segment The 2nd largest CV manufacturer in India

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Identifying End Customers Maruti Udyog Limited According to the officials of MUL, the companys endeavor is to be close to the customer, to anticipate and fulfill their needs. They believe that the new business initiatives taken by MUL have expanded the scope of this relationship. Maruti offers auto insurance, auto finance, corporate lease and fleet management and resale of pre-owned cars in partnership with its dealers. For the first time, car customers in India are able to access these services through a one-stop shop, backed by the leader brand. The way they look at it is that this will provide complete mobility solutions to the Maruti customer. This also enables them to extend their relationship with the customer beyond the point of purchase to the entire ownership life cycle. Since these services play a vital role in the car customer's ownership experience, the new initiatives enable them to offer Maruti owners greater value, assurance and convenience. Hyundai Motors India Ltd According to the officials of Hyundai Motor India is at a very exciting stage in India today. They are experiencing tremendous growth - which is a true sign of enjoying customer confidence. In order to strengthen their position further in the Indian market, they need to continuously work on building their corporate reputation while aggressively positioning their products. For HMI's focus and commitment to the Indian automobile customers is of critical importance. Its been their continuous endeavor to fulfill the entire spectrum of customer needs and desires, across all socioeconomic & lifestyle groups. They have therefore, in just 6 years of HMI's young life, established nationwide sales & service network, scaled up state-of-the-art manufacturing capacity, launched

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global-standard cars in rapid succession and exported cars made-in-India across the globe. Getz, a much admired lifestyle brand in Europe and elsewhere, is a step in the same direction and is a cutting-edge, addition to HMI's extensive product portfolio. General Motors According to the officials at General Motors is positioned as a mature and responsible car manufacturer, which offers great value for money products to its customers. The company leverages its global expertise to manufacture and market well engineered and safe products through its well-established retail network that provide an excellent ownership experience to its customers. Tata Motors According to the officials of Tata Motors the foundation of the companys growth over the last 50 years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer-desired offerings through leading edge R&D. Ford India Limited According to the officials of Ford India has reaffirmed its commitment to enhancing the purchase and ownership experience for its customers with the rollout of Ford Brand@Retail concept across the country. Ford India has been revamping all dealerships under the Ford Brand@ Retail, a global corporate identity program to offer a world-class purchase experience to the customer. Ford India continues to expand its distribution network and has grown to around 150 dealer outlets. The officials also mentioned that Ford India provides training support to dealers in areas including

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customer satisfaction, sales, technical and non-technical aspects of the business and in the financial management of the dealership. INTRODUCTION OF TATA NANO

Dream-dream and dream, because dream gives vision, vision gives thoughts and finally thoughts lead to the action". Each letter of these motivational words said by India's former President Dr. A.P.J. Abdul Kalam goes exactly with Mr. Ratan Tata, Chairman of Tata group, who in the year 2003, dreamt of producing a safe, affordable Car for the common man. Finally after the wait of five years, crossing all financial and technological barriers, Ratan Tata kept his promise and unveiled Tata 'Nano' on 10th January 2007, at the 9th Auto Expo 2008 in New Delhi. Tata Nano, cool & smart, launched by Tata Motors is world's cheapest Car with a price tag of $ 2500

THE MAKING OF TATA NANO

Ratan Tata rolls the window down and talks about the vision and conviction, the innovation and improvisation, and the leap of faith that went into creating the People's Car.

The launch of the People's Car by Tata Motors is a defining moment in the history of India's automotive industry. For Tata Motors, the car - christened the Nano, because it is a small car with high technology - is the next big step in a journey that began with the Indica. For the Tata Group, it

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is the realization of a pioneering vision to create a breakthrough product globally that rewrites the rules of the small-car business.

What does this path-breaking Endeavour really mean for the Chairman of the Tata Group, in many ways the inspiration behind the car? That's what Christabelle Noronha set out to discover when she met Mr Tata at Pune, as 2007, a momentous year for the Group, was drawing to a close. There has always been some sort of unconscious urge to do something for the people of India and transport has been an area of interest. As urbanization gathers pace, personal transport has become a big issue, especially since mass transport is often not available or is of poor quality. Twowheelers - with the father driving, the elder child standing in front and the wife behind holding a baby - are very much the norm in this country. In that form two-wheelers are a relatively unsafe mode of transporting a family. The two-wheeler image is what got me thinking that we needed to create a safer form of transport. My first doodle was to rebuild cars around the scooter, so that those using them could be safer if it fell. Could there be a four-wheel vehicle made of scooter parts? I got in touch with an industry association and suggested that we join forces and produce what, at that point, I called an Asian car: large volumes, many nations involved, maybe with different countries producing different sets of parts nobody took the idea seriously, nobody responded.

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This was similar to what happened when we wanted to get going on the Indica. I had proposed a partnership with an industry body to create an Indian car, designed, developed and produced in India, something that could be conceptualized and executed as an Indian enterprise. Everybody scoffed at the concept. I remember people saying, "Why doesn't Mr Tata produce a car that works before he talks about an Indian car." My confidence got a boost when we finally succeeded with the Indica. Willy-nilly, we decided to look at [the low-cost car] project within Tata Motors.

It was never meant to be a Rs1-lakh car; that happened by circumstance. I was interviewed by the [British newspaper] Financial Times at the Geneva Motor Show and I talked about this future product as a low-cost car. I was asked how much it would cost and I said about Rs1 lakh. The next day the Financial Times had a headline to the effect that the Tatas are to produce a Rs100,000 car. My immediate reaction was to issue a rebuttal, to clarify that that was not exactly what I had said. Then I thought, I did say it would be around that figure, so why don't we just take that as a target. When I came back our people were aghast, but we had our goal.

Today, on the eve of the unveiling of the car, we are close to the target in terms of costs. We are not there as yet, but by the time we go into production we will be. This project has proven to everyone that if you really set yourself to doing something, you actually can do it.

Two-three important events have influenced the development of the car; inflation, for one. The cost statement was made three-four years back but we are holding on to that price barrier. This will definitely diminish our margins. The price of steel, in particular, has gone up during the intervening period.

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A second point is that we initially conceived this as 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, in a manner of speaking. But as the development cycle progressed we realized that we could - and needed to - do a whole lot better. And so we slowly gravitated towards a car like everyone expects a car to be. The challenge increased exponentially; there was the low-price barrier, inflation, adding more features and parts to the vehicle, substantial changes in basic raw materials What the team has been able to achieve, in the face of all these constraints, is truly outstanding.

WHY INDIA MUST THINK SMALL TO STAY BIG

Ratan Tata looks positively relaxed as he walks into the lounge of Mumbai's private airport for this meeting. He has been awake since 3am and has just flown in from the south. There are hardly any signs of fatigue as he poses for pictures before the interview is scheduled to begin.

As the coffee comes in, Tata sends word to remind his driver to have his meal as he is going to be late. The first thing that strikes me about this man is his humility and disarming attitude. Remember, he is India's most powerful corporate chieftain who is equally well known across the world.

The topic now shifts to the all important Rs 1 lakh car and the rationale of moving down the value chain. Is this the best route and does it make sense to ignore the more profitable premium category?

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If you look at India, you have about one billion people growing at about 17-18 million a year. You have a middle class or a consuming class of about 250 million, which is increasing from the bottom up each year. And you have a higher percentage at the top of the pyramid, which has been the buying public hitherto for most Indian products.

There is also a segment of the market that is brand conscious, prestige-conscious and would often even prefer to buy foreign brands to Indian brands. They know what is happening elsewhere in the world and would prefer to put their money on a foreign brand rather than an Indian brand, he explains.

In the automobile sector, other than Tata Motors and Mahindra & Mahindra, the industry here largely comprises of foreign companies. As Tata says, while it is an issue of great satisfaction that these two Indian companies have been able to get meaningful market shares. in this arena, only the top part of the pyramid is being addressed.

Hence, the million-plus cars being sold are going mainly to that segment and somewhat to the top end of this large consuming area. I had projected that we would be a million cars in 2000 but that did not happen because we were in an economic downturn.

So we can say that in 2007, our market would be 1.7 million or two million units. But is that really the market potential of the country? After all, it is one where the people buy six million two and three wheelers, which is six times the passenger car market, he says.

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As everyone is aware, this is obviously because of the price disparity. The point therefore, he adds, is to be able to address the lower market somehow with a reasonable acceptable product. India, in any case is a country where people have a tremendous urge to own but often it is beyond their reach.

Why do you see such a great sale of clothing on a foot path? Why is Fashion Street in Mumbai so popular? The guy in the factory wears clothes that at least look like what the higher end wear. The fact that they come from Tibet or Nepal is not an issue.

Why is it that the same footpath sources are able to sell tennis or running shoes even if they are fraudulently branded Nike or Reebok? The person is aware of those brands, wants them but cannot afford to pay for them. So, he settles for these, remarks Tata.

What is clear is that if branded product manufacturers can address that market, it is a huge opportunity. The bigger question is the ability to address it and this where Tata believes it is possible.

If we are looking at a small car, we should not do this at the same proportion as cars of today are being looked at. We should be bold and take some risks so that we can have a much larger scale of consumption of that product in India or elsewhere. We need to take a gamble on that and that is my take on addressing that wider market, he says.

Tata believes that this is something that needs to be done because otherwise the Chinese will address that market in India with a suitable product. All that they will do is to squeeze the Indian

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manufacturers into a position at the higher end of the market, denying him access to the larger market.

We can certainly increase numbers by addressing the lower end on lesser margins but still be profitable. The Ace has been an example at the commercial vehicle end. It is the same thing where you are getting much more for that vehicle.

You must not be overpricing the value for what you are providing. If you can answer that, then it makes sense. Then if you take it further and put power steering, provide air conditioning and so on, it becomes an attractive product that others cannot compete with, he says.

According to Tata, the Rs 1-lakh car would probably be out towards the end of 2007-08. The way it is being planned now, it is going to be a rear engine car, essentially steel, with some plastic parts. It will be a five seater with four doors. No decision has been taken as yet on the engine capacity.

The car will have a continuous variable transmission. At that low cost, it will not have a clutch and will be easier to drive without any gears. It will be a product that will be simpler to deal with, easier for women to drive and something that we hope will add value to the customer, he says.

Tata Motors will produce the bulk of the production in its plant. This is where the entire concept becomes interesting. We What we also wish to do, which is still not fully clear and a concept at this point of time, is to create any opportunity for entrepreneurs, he says.

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Low cost units in different parts of the country will assemble the car where Tata Motors will take the responsibility for training on site and other aspects related to quality etc.

We will give young entrepreneurs the opportunity to establish enterprises in distributed areas to produce this for us. We will produce all the high volume parts and send them as kits to these assembly units. This will also enable us to address some international markets in Indonesia, Africa etc on the same kind of basis.

TATAS PEOPLES CAR:

Tatas one lakh car is the most expected car in recent times not only in india, the whole world is anticipating for the car. The one-lakh car is a case study which the whole world is watching. If successful, the car can spark demand in a new segment all over the world reports JD power an automotive rating and research firm. Thats why every news and rumors about the low cost car is getting covered in almost every magazines, every newspapers and every web portals even the mighty Business week and BBC is reporting about the developments of the car. The most expected car has also become the most controversial car in Indian history. Whether its the singur controversy or the competitors criticism in one or many ways the one lakh car is making news. While the Chevrolet Aveo, currently the cheapest car in the US, costs around $ 10,350 while Europes low cost contender the Dacia Logan costs around 6000 euros. Coming to india while most manufacturers are finding difficult even to make a 100cc bike for Rs40000 Tata is building a car for 1 lakh ($2500) and Tata has to break its own achievements and has to set new levels of

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benchmarks in design, production, assembly, logistics and whereever they can to produce a car at such a price. Can the Tatas meet the expectations? Will the one lakh car convey the indias potential to the world? Will Tata stick to its price tag? Will it make sense for Tata to have a car when other players are moving to premium segments? Will the more demanding customers will like the low cost machine? In this preview we will find answer for all these questions also we will know how tata is cutting the cost in all domains to adhere to its price tag.

NAME FOR THE COMMUTERS CAR:

The most watched car in the Indian car space the Rs 1-lakh ($2500) offering from the Tata Motors stables is still unnamed, but company sources here believe that `Jeh is emerging as the `most favoured name. It has always been our Chairman Mr Ratan Tatas dream to name one of the cars after J.R.D. Tata,said a Tata official.

WHATS THE 1 LAKH CAR ALL ABOUT?

Tata says the proposed Rs 1-lakh car would be a vehicle that will seat four to five people and have a rear engine. It will not be a scooter, three-wheeler or an auto-rickshaw made into a car. It will also not be a stripped down car. It will be an inexpensive car, he said, but added that it would obviously not have the finish or the high speed or the power of a larger car. It would be a rear engine, 4-5 seat, four-door car with about 30 hp (horsepower) engine. Though it is tough to preview a car which is guarded highly by its manufacturer, we will unveil as much we can in this post. The price we have announced is the price we are launching the car at. Tata never said the price will never rise. But he cant say if it did, when. When the Maruti van was first launched I

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bought one of those for Rs 50,000.Of course now that product is not available at that price. Our Endeavour with the Nano will be to hold our price as much as possible axAbout.com, All rights reserved. MODELS OF TATA NANO Tata Nano Standard Tata Nano Diesel Standard Tata Nano Deluxe Tata Nano Diesel Luxury Tata Nano Luxury Tata Nano Diesel Deluxe VEHICLE SUMMARY Name: Model: Car Body Type: Segment: Top Speed: 0 to 60: 0 to 100: Fuel Consumption: Highway Fuel Consumption: City ENGINE SPECIFICATIONS Displacement: Engine Type: Maximum Power: Maximum Torque: DIMENSIONS Length:

Nano Standard Hatchback A Segment 105 12.60 0.00 26.00 kmpl. 22.00 kmpl. 624cc, 3 cylinder, rear engine Petrol 33bhp@5500rpm 48Nm@2500rpm 3090 mm

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Width: Height: OTHER SPECIFICATIONS Seating Capacity: Tyre Size: Suspension: Steering: Brakes: Gears: Ground Clearance: Kerb Weight: Fuel Tank:

1485 mm 1570 mm 4 R12 McPherson strut & Independent coil spring Power Front Disk, Rear Drum 4 Manual 180.00 mm 580.00 kgs. 30.00

FIND VEHICLES Performance Better Fuel Efficiency Better Top Speed Safety Vehicles with ABS Rear Defogger Engine Type Petrol Engine Vehicles Diesel Engine Vehicles Comfort Find More Like This With Remote Central Locking Similar Body Type With Electric Seat Adjustment More Cars From Same Segment With Power Windows With Power Steering Body Type and Looks With Climate Control Sedan With Alloys Hatchback With Leather Seats Coupe With Remote Boot and Remote Roadster Fuel Filler Estate

Photos
Tata Nano Luxury

Photos
Tata Nano Basic

Interior Photos
Tata Nano

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TATA MOTORS TO PRODUCE ONE LAKH CAR IN THAILAND

Yesterday, there were media reports indicating Tata Motors would unveil a high-end variant of peoples car or 1 lakh car (jeh) at the upcoming Geneva Motor show. It is very obvious that Tata Motors would launch the one lakh car across the globe and will customise it depending on the market demand. For South East Asian Nation, its almost sure that Tata Motors will produce the one lakh car in Thailand plant. It recent years, Tata motors is very bullish on Thailand. Tata Motors is building an assembly plant in alliance with Thonburi Automotive to sell the Sprint pickup in Thailand from March 2008. Tata Motors has also submitted a request to Business of Foreign Trade in Thailand to set up an assembly plant for eco cars with a capacity of 100,000 units at an investment of over $250 million (1000 crores) in Thailand. Connecting the dots, we come to know that Tata Motors will produce an environment friendly variant of one lakh car in Thailand. CNG and LPG is likely to be the option. In addition, Tata will produce a much powerful (engine with a capacity of 1000cc) one lakh car in Thailand to cater to the needs of the region which are currently dominated by Japanese majors like Honda and Toyota. Safety features like airbags and ABS will be added to the one lakh car to comply the safety standards 24

TARGET MARKET
The low-cost car is clearly intended for the masses. For the family of four that would otherwise ride on a scooter, precariously balancing a tiny tot on the front and a baby on the wifes lap. For the first-time car buyer in India - a huge market despite the increasing number of cars in the urban and semi-urban areas. Its Also attract the small cars buyers like maruti 800.

WHAT MAKES TATA NANO SO CHEAP !

The Tata Nano uses plastics and adhesives rather than welding. introducing the car with an artificially low price through govt-subsidies and tax-breaks, or using vertical-integration, or Partially using inexpensive polymers or biodegradable plastics instead of a full metal-body. It has no AC, no power steering, no power windows, no power bells and whistles

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THINK BIG WITH THE SMALL CAR: RATAN TATA

Ever since the Nano debuted last week, Tata Motors chairman Ratan Tata has faced all manner of questions. From environmental (congestion/ pollution/emission) issues to the problems at the company's under construction plant in Singur, West Bengal. Normally reticent, he has painstakingly answered all of them. Here are some excerpts from some of the non-spec specific questions that he had to field at the Auto Expo.

The Nano project was delayed because of the political agitation and later other issues. Will Tata Motors be able to wrap things up as per schedule? And will the car itself undergo any more evolution?

There is always last minute engineering that gets done. The main issue is that we have built the plant. It was flooded earlier last year but thankfully before the machines and equipment were installed. The water receded and construction is now on in full swing both from our side as well as the vendors.

The problem in Singur was not of our making, It was unfortunate. I hope we can improve the quality of life in the highly district as a good corporate citizen should. We have already started to do that and I hope the plant will attract more industries and create more job opportunities for the local populace.

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A small car is a SMALL car. If one is looking for a limousine this is not the car to buy. If one is looking for a three-box sedan, this is not the car to buy. Ratan Tata has not made a claim to be the most eco-friendly in the world. They are in compliance with emission norms in India and this current engine meets BS3 and is capable to being scaled up to Euro 4 as well. There is a cost attached to being a totally green car. At the end of the day, all the things you ask for may not be there in this vehicle because we had a cost target. And that would include some of the green stuff as well. They are a socially responsible company but they are not a philanthropic trust. They will make profits. As for margins there would be several up trim versions and we will have our margins spread over those versions.

There has been widespread apprehension that this car would create congestion because of its sheer numbers...

All the question of congestion implies that we will seek the global market with millions of these vehicles. They dont have the resources to do that. But we are country of a billion people. Most Indians are denied connectivity and this is a way.

India desperately needs a mass transport system and better infrastructure. But those are issues that they dont deal with. They would be concerned if vehicle created absolute chaos all over India. If you faced chaos today it did not include these vehicles...so clearly there are other issues involved.

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This car is not a targeted at a particular segment of consumers. But having said that they hope it will change the manner in which one travels in semi urban and rural India.

Everybody has a desire of stepping aside, of wanting to do what one always wanted to do, to change gears. I have some responsibilities which I have to fulfill before I do that.

They dont think anyone should have sleepless nights. This was achieved by a bunch of young engineers. And if we could do it, it can be done by anyone, probably better. The largest element of cost in a car is material cost. India is not the cheapest on that count due to the tariff structure. But labor is inexpensive and productive. And engineering inputs are very viable.

Everybody seems to imply that if you are at the low end of the market, how you can look at highend cars. But no one asks Unilever for instance how they can make and sell cheap soaps in India or Africa and also expensive cosmetics elsewhere in the developed world.

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Tata Nano

Manuf acturer Also called Production Assembly Predecessor Class Body style(s) Layout Tata Motors The People's Car; the little bug 2008present Singur, West Bengal none City car 4-door kei car RR layout 29

Engine(s)

2 cylinder petrol Bosch multi-point fuel injection (single injector) all aluminium 623 cc (38 cu in)

Transmission(s) Wheelbase Length Width Height Curb weight Fuel capacity Designer

4 speed synchromesh with overdrive in 4th 2,230 mm (87.8 in) 3100 mm (122 in) 1500 mm (59.1 in) 1600 mm (63 in) 80 kg (1,300 lb)-600 kg (1,300 lb) 15 L (4 US gal/3 imp gal) Justin Norek

The Tata Nano is a city car launched by India's Tata Motors at the 9th annual Auto Expo on January 10, 2008 at Pragati Maidan in New Delhi, India Called the peoples car in Tata's promotional material, it is projected to be the least expensive production car in the world. The standard version of the Nano is projected to cost Rs 100,000 (not including levies or delivery charges) (US$2500, GBP 1277, 1700),. It may happen that Nano may not remain the cheapest car for long, if a competitor green-car called Tara Tiny EV is launched in India with a price tag of Rs. 99,999, 1 rupee less than the price of Nano. Because of its target price, the Nano is sometimes referred to as "one lakh car" (after the Indian numbering term, meaning '100,000'). The car's formal name derives from the extremely small unit of measure, the nanometre.

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HISTORY AND CONCEPTION

The project to create a 1 lakh rupee car began in 2003, under the Chairman of Tata Motors, Ratan Tata. The strategy behind the project was the awareness of the number of Indian families who had two wheeled transport, but couldn't afford a four wheel car, and was based on the company's success in producing the low cost 4 wheeled Ace truck in May 2005.

The Nano was unveiled at the 2008 New Delhi Auto Expo Industry convention was that a reliable car couldn't be made at such a low price, so initial media speculation was that the car would be a simple four-wheeled auto rickshaw. However, The Times of India reported that 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." During development the company reinvented and minimized the manufacturing process, brought in innovative product design, and asked component manufacturers to look at current work and design approaches in a different perspective to produce logical and simple solutions. The car was designed at Italy's Institute of Development in Automotive Engineering, with Ratan Tata ordering certain changes during the process, such as reducing the number of windscreen wipers from two to one.

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The interior of the Nano The Nano has 21% more interior space and an 8% smaller exterior, when compared with its closest rival, the Maruti 800. The car will come in different versions, including one standard and two deluxe variants. The deluxe version will have air conditioning, but no power steering. The car is expected to be produced in the Singur plant in West Bengal, which is under construction. The initial production target set by Tata Motors is 250,000 units per year. 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. The now-defunct Rover Group later based their City Rover on the Tata Indica while the eventual 'new Mini' was the much larger, technically conservative Mini (BMW).

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SCOPE OF THE STUDY

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SCOPE OF THE STUDY

This project has been undergone with special reference to Impact of Small car segment on two wheeler industry. This Project gave me a great learning experience and at the same time it gave me enough scope to implement my analytical ability. This Report will help to know about the impact of small car on the buying bevaiour of customers.

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OBJECTIVE OF THE STUDY

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OBJECTIVES OF THE STUDY

To find the small car available in India To find the market segment of small car To find the impact of small car on 2 wheeler Industry

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LITERATURE REVIEW

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LITERATURE REVIEW
Pingle (2000) reviews the policy framework of Indias automobile industry and its impact on its growth. While the ties between bureaucrats and the managers of state-owned enterprises played a positive role especially since the late 1980s, ties between politicians and industrialists and between politicians and labour leaders have impeded the growth. The first phase of 1940s and 1950s was characterised by socialist ideology and vested interests, resulting in protection to the domestic auto industry and entry barriers for foreign firms. There was a good relationship between politicians and industrialists in this phase, but bureaucrats played little role. Development of ancillaries segment as recommended by the L.K. Jha Committee report in 1960 was a major event that took place towards the end of this phase. During the second phase of rules, regulations and politics, many political developments and economic problems affected the auto industry, especially passenger cars segment, in the 1960s and 1970s. Though politicians picked winners and losers mainly by licensing production, this situation changed with oil crises and other related political and macro-economic constraints. The third phase starting in the early 1980s was characterised by delicensing, liberalization and opening up of FDI in the auto sector. These policies resulted in the establishment of new LCV manufacturers (for example, Swaraj Mazda, DCM Toyota) and passenger car manufacturers.7 All these developments led to structural changes in the Indian auto industry. Pingle argues that state intervention and ownership need not imply poor results and performance, as demonstrated by Maruti Udyog Limited (MUL). Further, the non contractual relations between bureaucrats and MUL dictated most of the policies in the 1980s, which were biased towards passenger cars and MUL in particular.

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However, DCosta (2002) argues that MULs success is not particularly attributable to the support from bureaucrats. Rather, any firm that is as good as MUL in terms of scale economies, first-comer advantage, affordability, product novelty, consumer choice, financing schemes and extensive servicing networks would have performed as well, even in the absence of bureaucratic support. DCosta has other criticisms about Pingle (2000). The major shortcoming of Pingles study is that it ignores the issues related to sectorspecific technologies and regional differences across the country. Piplai (2001) examines the effects of liberalisation on the Indian vehicle industry, in terms of production, marketing, export, technology tie-up, product upgradation and profitability. Till the 1940s, the Indian auto industry was non-existent, since automobile were imported from General Motors and Ford. In early 1940s, Hindustan Motors and Premier Auto started, by importing knowhow from General Motors and Fiat respectively. Since the 1950s, a few other companies entered the market for two-wheelers and commercial vehicles. However, most of them either imported or indigenously produced autocomponents, till the mid-1950s, when India had launched import substitution programme, thereby resulting in a distinctly separate auto-component sector. Due to the high degree of regulation and protection in the 1970s and 1980s, the reforms in the early 1990s had led to a boom in the auto industry till 1996, but the response of the industry in terms of massive expansion of capacities and entry of multinationals led to an acute over-capacity. Intense competition had led to price wars and aggressive cost-cutting measures including layoffs and large-scale retrenchment. While Indian companies started focusing on the price-sensitive commercially used vehicles, foreign companies continued utilizing their expertise on technology-intensive vehicles for individual and corporate uses. Thus, Piplai concludes that vehicle industry has not gained much from the reforms, other than being thrusted upon a high degree of unsustainable competition.

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In August 2006, a Draft of Automotive Mission Plan Statement prepared in consultation with the industry was released by the Ministry of Heavy Industries and Public Enterprises. This was finally released as a report in December 2006. This document draws an action plan to take the turnover of the automotive industry in India to US$145 billion by 2016, accounting for more than 10 per cent of the GDP and providing additional employment to 25 million people, by 2016. A special emphasis is laid on small cars, MUVs, two-wheelers and auto-components. Measures suggested include setting up of a National Auto Institute, streamlining government/educational/research institutions to the needs of the auto industry, upgrading infrastructure, considering changes in duty structure and fiscal incentives for R&D. Similarly, NMCC (2006), which lays down a national strategy for manufacturing, recognises the importance of the Indian automobile and auto-component industry, particularly the latter, as a competitive knowledge-based industry with immense employment generation potential.

McKinsey (2005) predicts the growth potential of India-based automotive component manufacturing at around 500 per cent, from 2005 to 2015. This report describes the initiatives required from industry players, the Government and the ACMA to capture this potential. This study was based on interviews and workshops with 20 suppliers and 7 OEMs and survey with ACMA members. Increase in cost pressures on OEMs in developed countries, coupled with the emergence of skilled, cost-competitive suppliers in Low Cost Countries (LCCs), is likely to facilitate further acceleration of sourcing of automotive components from LCCs. The analysis identifies strong engineering skills and an emerging culture of cost-competitiveness as the major strengths of the Indian autocomponent sector, while its weaknesses include slow growth in domestic demand and structural disadvantages such as power tariffs and indirect taxes.

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The policy recommendations of this study include VAT implementation, lower indirect taxes, power reforms, tax benefits linked to export earnings, duty-cut for raw material imports, R&D incentives for a longer period, establishment of auto parks, benefits for export-seeking investments, human resources development and modernisation fund for new investments in auto clusters. Industry players have been advised to improve their operational performance, determine their strategic posture as one among those identified in the study, improve capabilities in line with their posture and invest very rapidly in a planned manner. ACMA needs to promote India as a brand, enable sourcing from India by global customers and promote the quality and productivity efforts of the auto component firms in India. ACMA (2006) notes that Indias joining the WP (Working Party) 29: 1998 Agreement for global harmonisation of automotive standards, coupled with the funding of National Automotive Testing and Research Infrastructure Project (NATRIP) by the Government of India, has increased prospects of the Indian auto industry rising up to global standards in the near future, in all aspects.

Narayanan (1998) analyses the effects of deregulation policy on technology acquisition and competitiveness in the Indian automobile industry during the 1980s and finds that competitiveness has depended on the ability to build technological advantages, even in an era of capacity-licensing. In a liberalised regime, this would depend on firms ability to bring about technological changes, as inferred from the behaviour of new firms in the sample considered. Further, vertical integration could score over subcontracting in a liberal regime. This is probably because of the entry of new foreign firms that produce technologically superior and guaranteed quality vehicles and choose to produce most of the components in-house.

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Narayanan (2004) analyses the determinants of growth of Indian automobile firms during three different policy regimes, namely, licensing (1980- 81 to 1984-85), deregulation (1985-86 to 199091) and liberalisation (1991-92 to 1995- 96). Unlike the prediction by Narayanan (1998), this study finds that vertical integration is detrimental for growth in a liberalised regime as it potentially limits diversification. Narayanan (2006) also finds that vertical integration plays a positive role in a regulated regime, while it is not conducive for export competitiveness in a liberal regime.

Kathuria (1995) notes that the time-bound indigenization programme for commercial vehicles in the 1980s facilitated the upgradation of vendor skills and modifying vehicles to suit local conditions, which demand functional efficiency, overloading capabilities, fuel economy, frequent changes in speed and easy repair and maintenance. Kathuria also mentions that the choice between vertical integration and subcontracting crucially depends on the policy regime: In a liberal regime, vertical integration may not work.

Sharma (2006) analyses the performance of the Indian auto industry with respect to the productivity growth. Partial and total factor productivity of the Indian automobile industry have been calculated for the period from 1990-91 to 2003-04, using the DivisiaTornquist index for the estimation of the total factor productivity growth. The author finds that the domestic auto industry has registered a negative and insignificant productivity growth during the last one and a half decade. Among the partial factor productivity indices only labour productivity has seen a significant improvement, while the productivity of other three inputs (capital, energy and materials) havent shown any significant improvement. Labour productivity has increased mainly due to the increase in the capital intensity, which has grown at a rate of 0.14 per cent per annum from 1990-91 to 2003-04.

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Humphrey (1999) compares the impact of globalisation on supply chain networks in the auto industry in Brazil and India. According to Humphrey, global auto industry hubs were situated in three regions, namely, North America, Western Europe and Japan. Brazil and India are examples of the countries which could develop the indigenous auto industry despite not being situated very close to any of these regions. Hence, Humphrey compares the auto industries in these two countries. This study considers auto industry as a producer-driven commodity chain, wherein global auto assemblers control the entire supply chain from components to dealerships.

Veloso and Kumar (2002) provide an overview of the major trends taking place in the global automotive industry, emphasising on the Asian market. Consumer preferences, government regulations and intense competition have been driving the firms towards new technologies, modernisation, research and changes in design and production. Market saturation in Triad regions (the United States, Western Europe and Japan) and rapid emergence of markets in Asia have led to increasing diversity in market needs. As a result, there are many models and segments coming up rapidly.

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RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY
Research is common parlance refresh to a search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific topic. In fact, research is an art of scientific investigation. The Advanced Learners dictionary of current English lay down the meaning research as a careful investigation and inquiry especially through search for new facts in any branch knowledge.

TYPES OF RESEARCH
There are the following types of research, which are as follows. 1. Descriptive vs. Analytical: Descriptive research includes surveys and fact- finding enquiries of different kinds. The majors purpose of descriptive research is description the set of affairs it exists at present. In analytical research, on the other hand, the research has to use facts or information already available, and analyze these to use fact or information already available, and analyze these to make a critical evaluation of material. RESEARCH DESIGN A research design is the arrangement of conditions for collection and analyses of data in a manner that aims to combined relevance to the research purpose with economy in procedure. In fact, the research design is the conceptual structure within which research is conducted; it is constitute the blue print for the collection, measurement and analyses of data.

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DATA SOURCES The task of data collection begins after a research problem has been defined and research design/plan chalked out. While deciding about the method of data collection to be used for study, the researcher should keep in mind two types of data. SECONDARY DATA: These data are already collected by someone else and which have already been passed through the statistical process. The researcher would have to decide which sort of data he would be using for his study and accordingly he will have to select one or other method of data collection.

COLLECTION OF SECONDARY DATA

Secondary data means data that are already available i.e.; they refer to data, which have already been collected and analyzed by someone else. When the researcher utilizes secondary data, then he has to look into various sources from where he can obtain them. In this case he is certainly not confronted with the problems that are usually associated with the collection of original data. Secondary data may either be published data or unpublished data. Usually published data are available in: Various publications of central, state and local governments Various publications of foreign governments or of international bodies and their subsidiary organizations Technical and trade journals Books, magazines and newspapers etc Reports and publication of various associations connected with business and industry, banks, stock exchanges etc. 46

Reports prepared by research scholars, universities, economists etc Public records and statistics, historical documents

Our project is based on secondary data also which we have collected from various sources Annual reports Websites Journals

In this research project, secondary data were used. Magazines, journals, annual reports, statements and periodicals were consulted to fetch the information. Research project is also based on the information collected from various websites and e-links. RESEARCH METHODOLOGY USED:Types of research:- Descriptive Data type:- The research is based on secondary data. Data sources:- Websites, books, newspapers etc. Data analysis and interpretation techniques:The study is based on the secondary data which has been collected from websites, journals, newspapers etc. The study may not involve test for sampling because the primary data is not collected for the purpose of study.

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FINDINGS AND ANALYSIS

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FINDINGS AND ANALYSIS IMPACT OF NANO ON AUTOMOBILE INDUSTRY

The Nano effect has simply rubbed on different automobile sectors in many different ways. Most of the corporate sectors are now simply considering of offering Nano to its employees as an incentive. The companies simply want to retain its junior level executives by offering them a Nano as incentive. The senior executives are also sure that Nano would certainly make a good offer to their junior executives. The car with its value is certainly the best offer for gifting anyone. Nano has simply replaced the Maruti 800 in the Indian market. Earlier where junior executives were offered Maruti 800 as incentives for fulfilling their target, today they have a Nano parked in their garage. Sales representatives are sure to come first in the list for the Nano. Many other skilled workers from the manufacturing and engineering unit are usually the followers. So, if speaking of the list, Nano has already managed to get a number of followers. The attractive price tag has simply attracted more customers to shift their choice from Maruti 800 to Nano. The super ultra low cost car could simply replace a number of other costly incentives including foreign tours, laptops and LCD TV for their junior employees. The car is not only very much cost effective but also a perfect family car that is well suited for accommodating a member of four. The car also has a very low maintenance cost and is also very much fuel efficient. It is also marked as an improvement for those entire motorbike lover junior executive who prefer purchasing a motorbike soon after getting an employment. Most of the multinationals are in fact considering of scrapping off Maruti 800 and motorbikes from their employers menu and enabling them to

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purchase the Nano. The car also offers a more competitive price as compared to 800 or even a motorbike. Certain companies are also considering of attracting new employments by simply offering them a Nano as employees benefits. Most of the HR executives also believe that the car would provide more safety to their employees as compared to two wheelers or even Maruti 800. So, people who travel to their office daily can actually travel without carrying any amount of risk. Most of the Indian companies today have their overseas operations and they could also consider of offering the new Tata Nano to their foreign employees. So instead of paying more for the European or Japanese cars, these Indian companies may also offer a Nano to their overseas employees. Earlier where Maruti 800 was also considered as a status symbol amongst most of the high ranked officers, Nano is simply stealing away the market for small cars. So, Nano has simply succeeded in establishing a new generation of executives waiting to get their hands on it. being the most fuel efficient car in the Indian market Nano has gained the popularity even before it hit the roads. Today, Nano is not merely a family car but is also the most talked about car in the automobile market. So, with its gaining popularity Nano is simply thinking of crowding the Indian roads.

NOW EVERYONE CAN OWN A CAR!

A family of four, wobbling along dangerously on a two-wheeler on a rickety road, inspired Tata Group chairman Ratan Tata to think of building an affordable car for the masses. Of course, to set

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the thought in motion, gather together the brains, the infrastructure, the resources and meet the challenges enroute took six long years, but the big Nano moment is finally here! Initial reports claim that the car is a cleverly designed smart piece of auto engineering, which comes with an affordable price tag and attractive looks! Touted as next in line of 'People cars' The economics of it, the first reports of the test drives, and the looks of it are factors that is getting everyone excited about the model, the make and the manufacturer. Tata operates around the USP (unique selling proposition) of bringing products to the masses, making them as affordable as possible. Time will tell how the future of this move pans out. So far the initial response for the product has been mostly positive. Safety a key factor for upgrading from a two-wheeler It will definitely eat into the two-wheeler pie, as a car offers more safety than a two-wheeler and it is more likely that more and more youngsters and people who have to commute long distances to work, and small families who travel within the city together will find the Nano a safer and more comfortable alternative. Designed for a family of four, though shorter by around 8 per cent in length compared to the average small car, its is reported to have around 21 per cent more spacious interiors. Likely value for money for the used-car buyer People, who have the option of buying a small used-car for reasons of affordability or fuel efficiency, could choose to buy a new car in the form of the Nano. With a 623cc engine, the Nano 51

is a city car that is claimed to have a fuel efficiency of around 23 km per litre. The average km per litre range of most other small cars is between 10 km and 16 km per litre within the city. The small car segment vs Nano Though the impact of the Nano on the two-wheeler segment and the used-car segment could be relatively high compared to its impact on the small car segment, this again depends on the performance of the car, how it stabilises and user reviews of initial performance once it hits the roads. In recent times, a host of new products have been launched in the small car segment by popular brand names like Maruti, Hyundai , Chevrolet and others. The high selling point of the Nano at this point in time is the extremely affordable price tag and the fact that it looks quite fetching in terms of design and gives consumers the snazzy feel of commuting in a hi-tech 'cool' car. It comes with an engine management system, components of which have been designed by Bosch and has safety features like the fuel injection being cut off if you reverse the car too fast and a warning light displayed on the dash board with a buzzer chime being set off in case of high engine temperature, engine misfire, over speeding, etc. However, the disadvantage seems to be the long waiting period that the car buyer is likely to face in purchasing the Nano. An aspiring small car buyer who cannot afford to wait for too long, may tread with caution with regard to opting for a 100 per cent payment for booking and then waiting for months before owning the car. The lending scenario

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The consumer perspective: All the former two-wheeler aspirants who were looking to purchase one in the range of Rs 40,000-plus will want to upgrade their choice, tilting the scales in favour of the Nano. They may take a loan for the remainder of the money. People who had been saving up a down payment to buy a brand new small car, could decide against taking a loan (as the popular sentiment towards debt has always been one of caution as far as Indian consumer is concerned) and opt to go with the Nano instead. The lender perspective: Reports suggest that the two-wheeler loan segment shows higher delinquency rates and hence the interest rates of two-wheeler loans generally range between 21 per cent and 23 per cent. As Nano aspirants are also largely expected to fall under this category, according to the credit profile of the consumer the interest range could have been anywhere between 17 per cent and 19 per cent or higher. The ongoing interest rates for car loans with most banks is in the range of around 14 per cent. Also, banks that finance loans for the most affordable cars tend to hike the required down payment as this particular segment of auto loans is likely to fall under the high default category. In the wake of such a scenario, the exclusive Tata-State Bank of India agreement to fund the purchase of a Nano seems to pave the way for the masses as a first step towards having access to the most affordable car in the market. The Nano car loan is available for a maximum tenure of 7 years at an interest rate that ranges between 11.75 per cent and 12 per cent p.a. Through this tie-up, more than 1,350 branches of State Bank of India would assist in the booking process, besides, Tata Motors passenger car dealerships nationwide, Croma and Westside stores.

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SBI will be managing and marketing the application form sale from 11,111 plus branches. Applicants have the option of making the full booking payment by themselves or seek financing for Nano booking from SBI with a down payment that starts from Rs 2,999. As there is a very high demand for the Nano compared to the actual supply currently, bookings are being taken only for 100 per cent payment with a possibly long waiting period. Tata is likely to face more challenges especially in catching up with the demand, as such a product will invoke mass demand hinging pretty close to the demand seen for two-wheelers. This would especially hold true if the new launch stands the test of time.

NO NANO IMPACT ON US: TWO-WHEELER MANUFACTURERS

Major two-wheeler manufacturers are unanimous that the Tatas' Nano will have no impact on their business. "Nothing much has changed since the unveiling of Nano at the Auto Expo except for the announcement of prices. I still maintain it is not going to have any real impact on two-wheelers," Hero Honda Motors Managing Director and Chief Executive Officer Pawan Munjal told reporters on Thursday on the sidelines of the CII Annual Session. He said going by the price there is a fair difference between the cost of ownership and maintenance of the Nano and two-wheelers. TVS Motor Company Chairman Venu Srinivasan said, "There will be no major impact on twowheelers. It (Nano) will create its own segment." 54

In a similar vein, Bajaj Auto Chairman and Managing Director Rahul Bajaj said, "I don't see a Pulsar buyer going to Nano. He wants a Bajaj Pulsar, not a Tata Nano." However, the country's largest car maker, Maruti Suzuki India, on Thursday said that "Tata Nano" may have a marginal impact on the sales of the Maruti 800 but ruled out cutting price. "It (Nano) may have a marginal impact on the Maruti 800 segment, but we don't have any plan to cut its price or enter (the) Nano segment," Maruti Suzuki India Chairman R C Bhargava told reporters.

TATA NANO WON'T AFFECT TWO-WHEELER SALES: HERO HONDA

Published on Thu, Mar 26, 2009 at 12:32 At the Confederation of Indian Industry (CII) meet, commenting on the Tata Nano launch, Pawan Munjal, MD and CEO of Hero Honda Motors, said the small car will not have any impact on the two-wheelers industry. According to Munjal, the cost of ownership of the low-budget car will be a challenge for Nano buyers. Munjal said service, spares, registration, parking cost will be much higher for Nano buyer. The differential between a two-wheeler price and the Nano is significant, Munjal said. The two-wheeler consumer is very different from a car buyer and in that the differential in the initial buying price of two-wheeler and a car still stays. That has become even more now with the price that has been announced and also the fact that the price of this car is closer to the high end motorcycle and a high-end motorcycle buyer is not the buyer for a Nano car. After Tata Motors launched its high-profile Rs 1 lakh car, Tata Nano, on March 23, auto experts said the small car may eat up into sales of two wheelers as the entry barrier for the car had now come down as was quite close to that of premium bikes. 55

LOW COST CARS NO THREAT TO 2 WHEELERS: BAJAJ CEO

Mr S Sridhar, CEO, 2-wheelers, Bajaj Auto Limited, at the launch of Bajaj Discover 150cc in Hyderabad recently. P Madhusudhan Reddy May 12, 2010 HYDERABAD: Bajaj Auto Limited is one of the prominent players in the two-wheeler and threewheeler market in the country and is currently second largest two-wheeler brand behind industry leader Hero-Honda. However, it is a dominant player in the sports bike segment with the presence of popular models from Pulsar family. It also turned aggressive in the computer bike segment by launching, in July last, the Discover 100 cc bike, which was a runaway hit with sales of over 6.5 lakh units in just 250 days. Riding on its success, the automaker has launched Discover 150 cc two days ago and expects the new offering to further strengthen its presence in the commuter bike segment. But it is widely speculated that advent of numerous low cost car planned for Indian auto market will adversely impact two-wheeler sales in country as these models are primarily targeted at the two-wheeler customers. Will the low cost cars really eat into two-wheeler market? How the sales 56

of Bajaj bikes will be affected in such scenario? Time will only tell whether low cost cars can make inroads into the two-wheeler market. However, Andhrabusiness.com met Mr S Sridhar, CEO, 2-wheelers, Bajaj Auto Limited, when he was in Hyderabad recently to launch Discover 150 cc, to elicit his opinions on the nagging questions. Excerpts: 1. Would the ultra low cost cars (ULCs) eat into the two-wheeler market in the country? There is no way low cost cars will impact on two-wheeler sales in India. Two-wheeler sector in the country posted a healthy growth of 18 per cent last fiscal even after launch of the Tata Nano. This proves that the adverse impact of low cost cars on the two-wheeler segment will be negligible. Moreover, there are no new bookings for Tata Nano now. The countys two-wheeler market is poised for a healthy growth in coming years despite entry of low cost cars. 2. But, dont you think ULCs will affect two-wheeler sales in 10 years time, if not immediately? Is this the reason behind Bajaj Autos plans to foray into the ULC segment? I dont see any threat to two-wheelers even after 10 years though it is difficult to estimate industry dynamics that far into the future. However, the main differentiator between two-wheelers and cars is the mileage. It is easy to buy a low cost car, but not easy to maintain it because of fuel expenses and expensive maintenance. A car will give only a maximum mileage of around 20 km per litre but it is three times of that in the case of bikes. So bikes are the clear winners. But things may change little if the low cost cars with higher fuel-economy are launched, as planned by our company which is targeting a mileage of 30 kmpl for its small car. However, Bajaj Auto is not entering into the low cost car segment because it has perceived a threat to its two-wheeler business. Bajaj Auto, like any another business entity, looks for new business avenues and small car segment is one such opportunity for it. Moreover, its not a new idea as the company has been doing the groundwork for the past three or four years.

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3. Dont you think the mileage target of 30 km per litre for the small car is too high? Baja Auto Limited has enormous experience in two-wheeler manufacturing and produced some of the best bikes that give tremendous fuel-economy. It was unthinkable to achieve a mileage of 80 km per litre for a 100 cc bike before launch of our Discover 100. We had succeeded in doing that. Our company will leverage its experience in two-wheelers to produce an efficient engine for the small car, which will give the targeted mileage. 4. Coming to the two-wheeler segment, how do you rate entry of Harley-Davidson into India? In India, two-wheeler market has transformed over the years and more people are buying upscale and expensive bikes. It is a curious trend in the country where people are opting for low cost car models while going for expensive ones when it comes to bikes. It is clearly visible in the case of our Rs 3-lakh Ninja bikes. We are selling around 100 these bikes a month now which is unheard of previously. So, India is ready for super luxury bikes now and thats why international players like Harley-Davidson are coming here. However, I dont see much scope for the bikes priced beyond Rs 7 to 8 lakh. Bajaj Auto also has plans to bring in some more upscale bike models this year. In addition, the company, which has tie-up with KTM, will launch KTM superbike models soon though I am not authorized to give specific details about the KTM roll-out here. 5. How is the current two-wheeler market in the country? Two-wheeler sector is doing pretty well in the country. As I said earlier, the industry as a whole grew at 18 per cent last fiscal. A similar growth will be okay for this year. We dont complain even if it grows 16 per cent, as even then, it will be a healthy growth for the industry.

6. When do you overtake Hero-Honda and emerge as biggest player in the country? We dont look at it that way. Our first priority is to offer best products to our customers, and

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launch new models every two or three months. We are a dominant player in sports and luxury bikes with a market share of around 50 per cent though our presence in entry-level and commuter bikes lags behind the industry-leader. Our current market share in commuter bikes stands at 17 per cent at present and with the launch of Bajaj Discover 150cc, we expect it to surge by 5 to 6 per cent. Our first offering in Discover range, Discover 100 cc, did extremely well in the market with sales zooming from just around 10,000 units in the first month after its launch in July 2009, to around 80,000 units per month now. We are expecting the newly-launched Discover 150 cc to replicate its siblings success and entrench our presence in the crucial commuter bike segment. Our overall market share stands at 27 per cent now and will grow this year. 7. Which segment and model range will drive your growth in coming years? Our entire focus will be on Discover and Pulsar range of bikes and we will be launching several variants mostly from these two ranges. As you are aware, Discover range is targeted at the commuter bike segment while Pulsar family will be the flagship range aimed at the customers who are looking for excellent sports bikes at an affordable price. These two bike families will drive our growth in coming years and contribute handsomely to our bottom line. 8. Do you have any regrets about discontinuation of Bajaj Chetak? Any plans to bring back it in any new avatar? When people are ready to pay Rs 70,000 for any entry-level Pulsar bike, what is the use of bringing back Rs 25,000 Chetak? Its an old story as we discontinued the model seven years ago. I dont see any reason to bring it back in the current climate dominated by bikes. It will definitely be a backward step if we revive.

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NANO TO CHANGE THE DYNAMICS OF THE AUTOMOBILE INDUSTRY

With the launch of Nano, Tata Motors has sparked off competition across automobile segments. Nano would change the dynamics of the automobile industry. Demand for small car, two-wheeler and passenger three-wheeler segments of the automobile industry are expected to get hit. Though a new segment all together, the price point would induce a shift from these segments. The impact on two-wheeler demand is expected to be severe with further extension of the current scenario of shift in preference in favour of entry-level four-wheelers. With rising income levels the market has witnessed a gradual slowdown in two-wheeler demand and a consequent rise in entrylevel four-wheeler demand. Two-wheeler sales have plummeted in 2007-08. Sales registered a 5.2 per cent fall to 60.7 lakh two-wheelers during April-December 2007 on a y-o-y basis. With Nano priced equivalent to a passenger three-wheeler (widely used as public transport) it is also likely to face the brunt of Nano competition. Performance of the three-wheeler industry has been poor in the current year. Increasing competition from Tata Motors' one-tonner LCV - 'ACE' has led to fall in demand for three-wheeler goods carriers. And now, Nano is posing a threat to the passenger three-wheeler segment. Success of Nano is expected to make every auto company change the way it works and looks at the volume market. The creation of an ultra low cost segment has already created a shudder in the automobile industry. Many automobile companies have announced their entry into this segment while others have hinted price cuts to sustain demand.

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Prima facie, Maruti, Hyundai Motors, Hero Honda and Bajaj Auto are the companies that are likely to face a severe competition from Nano. While Maruti is already contemplating re-pricing its cheapest offering - Maruti - 800 aggressively, Bajaj Auto has firmed up plans to foray into the small car segment, not in the Nano range, but, surely cheaper than Maruti - 800. The company showcased its concept car - 'lite' at the 9th Auto Expo. Of the above companies, Nano will have a double whammy impact on Bajaj Auto as Nano is likely to impact the demand for two-wheelers as well as three-wheelers. Global auto majors such as Toyota, Honda, General Motors, Ford etc. who were already working on their India specific small cars have put their respective small car plans on the fast track. Within a week of the Nano launch, Toyota and Volkswagen have mulled a possible entry into the ultra low cost car segment. Toyota claims that development of the prototype of its small is on final stages and will come up by 2009. Volkswagen is also believed to be working on a small car design exclusive of its current line of small cars to be launched in the country. The company is likely to roll this product under a different brand. Global majors have also announced increasing the proportion of local content in their products to enable them to price their offerings competitively against the local leaders.

NANO FEARS HIT TWO-WHEELER MANUFACTURERS

New Delhi, Mar 3: The Nano fear seems to have begun to creep into the minds of two-wheeler manufacturers. In a post-Budget meeting with the finance minister on Monday, the biggies of twowheeler industry, Hero Honda and Bajaj Auto, requested for a further reduction in excise duty on

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two-wheelers from 12% as announced in the Budget to 8%, for a level-playing field with small-car manufacturers. The industry fears that Tata's Nano, earlier priced at Rs 1 lakh, would now be available at a lower price and hence impact the sales of two-wheelers. "Two-wheelers are used by real aam admi (common man)," Pawan Munjal, managing director, Hero Honda said while making a case for lower excise duty on two-wheelers. "The excise duty on two-wheelers and three-wheelers should be brought down to 8%," Rahul Bajaj, chairman of Bajaj Auto added. According to an industry expert, "Tata Nano, slated for a launch in October, would now fall under the 12% excise duty announced for small cars and this might result in dropping of prices of Nano. This would be in line with a similar reduction announced by various car manufacturers immediately after the Budget and would make the executive and premium bikes even less-price competitive vis-a vis Nano". Assuring the industry that he would keep a close watch on developments in the auto sector, finance minister, P Chidambaram said he had kept the duties at the same level for auto and small cars "as they enjoyed the same duty in the last two-three years". "Reduction in duty would help gain some volume but the phenomenon will be short-lived unless the issue of retail financing as well as high interest rates is considered," adds Atul Gupta, vice president (sales and marketing), Suzuki Motorcycle India Pvt Ltd. The two-wheeler industry, especially motorcycles have been losing steam ever since December 2006, which was followed by a series of interest rate hike. According the Society of Indian Automobile Manufacturers, the cumulative sales of motorcycles during April-December was down by 12.43% to 48,36,908 units as compared to 55,23,661 units sold during the same period last

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year. This is contrary to a double-digit positive growth of 16.37% for compact cars at 7,04,172 units during this period. In its pre-Budget memorandum, the two-wheeler industry had asked the government to bring down the excise duty on two-wheelers from 16% to 8%. However, now that the duty has been reduced to some extent, it still continues to be the same as that on small cars, the industry wants the government to reconsider their demand of reducing the excise duty to half before the Budget proposals go to Parliament for approval.

2-WHEELER, AUTO-RICKSHAWS MAY FEEL NANO IMPACT

World's cheapest car begins the final lap to launch. With the long-awaited launch of Tatas Rs 1 lakh Nano just days away, leading automobile companies are busy assessing its impact on their businesses. Some companies think the Nano will replace the three- wheeler auto-rickshaw market, creating an alternative mode of commercial transport. Others believe the small car will wean away potential Maruti 800 buyers, convert automatic and gearless scooter owners and prove an attractive alternative to both second-hand car and premium motorcycle customers. But the real threat from the Nano, they say, will begin only when it launches its diesel version, which might be more expensive but is expected to draw in large volumes. Tata Motors is expected to produce around 100,000 cars in the first year and will ramp up capacity once its plant in Gujarat goes on stream by October this year.

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The Nano is similar to or cheaper than an auto-rickshaw and offers similar mileage. But it provides more safety and has superior technology, so I see the conversion of this market to the Nano, said R C Bhargava, chairman of Maruti Suzuki India, the countrys largest car marker. Over 300,000 auto rickshaws are sold annually with price tags ranging from Rs 1 lakh to Rs 1.5 lakh. The Nano could provide an alternative even for commuters who use auto-rickshaws. Bhargava conceded that some potential Maruti 800 buyers might also shift to the car though their numbers would be small. Some marginal customers who really stretch their pockets to buy Rs 2 lakh-plus car might now look at the Nano, he said, adding: Potential motorcycle buyers who get a loan may also look at a Nano. Its real impact on the small car market, however, can be gauged only when the product stabilises. Bhargava rules out the possibility of cutting the price of the Maruti 800, saying its margins are already wafer thin. For a price reduction, you are dependent on tax concessions given by the state and, unlike the Nano, we dont get any in Haryana he pointed out. Overall, both car and two-wheeler companies think the Nano may have a more immediate impact on the two-wheeler market than on small cars. But they differ on the degree of the impact. Bajaj Auto predicted that the Nano would wean away scooter buyers, especially those driven by women, who account for nearly 30 per cent of sales (approximately 95,000 scooters are sold every month). Scooters constitute 11 per cent of two-wheeler sales. Nano is an intra-city product that will have an emotional connect with families that buy scooters either for the daughter or wife, said S Sridhar, CEO of the two-wheeler segment at Bajaj Auto. Most of these consumers are well-to-do and would prefer the safety and reliability that Nano

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would provide over a scooter. Plus, the mileage of scooters, unlike that of a motorcycle, is not that attractive. Car-maker Hyundai Motors sees the Nano eating into two-wheeler sales even as it expands the passenger car market. The Nano will have an adverse impact on the motorcycle market, but we dont see it taking away customers from the current small cars, said Arvind Saxena, senior vice-president of Hyundai Motors India Ltd. He pointed out that customers are not looking only at low price as the sole criterion to buy a car but also seating capacity, style and comfort. If price were the only criterion, then sales of the Maruti 800 the cheapest car currently would not have declined, he added. Motorcycle makers, however, argued that less than 5 per cent of premium customers may be weaned away to the Nano, so its impact on their sales will be limited (30 per cent of motorcycle sales are in the premium segment). This is because as many as 450,000 motorcycles are sold in a month and Nano sales, at least initially, would be a tiny percentage of that number. The 100 cc bike is available at Rs 30,000, so it is one-third the price of a Nano. And the maintenance cost of a car is four times that of a motorcycle. And remember, the motorcycle buyer has a monthly salary of much less than Rs 10,000 a month. For him the Nano is out of reach, said a top executive of a leading two-wheeler company. Bajajs Sridhar added that those who buy premium motorcycles in the range of Rs 50,000 to Rs 75,000 are unlikely to switch to the Nano because their purchase decisions are driven by different

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motives. They have high income levels and they buy bikes to make a statement and enjoy the power. Such customers will not go and buy a small, cheap car. Bajaj has also ensured that it offers customers more power in its motorcycle without compromising mileage that, at 70 km to a litre, is a major disincentive for customers to shift to a small car.

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CONCLUSION

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CONCLUSION

Now finally most awaited product of TATA i.e "NANO" CAR has been launched in

India. It was normally asked to me that what the impact of Nano in India is.
Last year, It was the hot topic for discussion. Now it has been launched then again it

is back. Here I would like to discuss only benefits.

The first benefit is safety. It will provide more safety than a 2 wheeler. The family

of four person struggling for space in dangerously wobbling two wheeler. Now Nano will provide a good option.
Second, people have option for buying a small used car to reap the benefits of

affordability and fuel efficiency, could choose to buy a new car in form of NANO. Fuel efficiency is also good i.e near about 20km/litre.
Impact of Nano on 2 wheeler segment and used car segment could be high relatively

high compared to its impact on small car segment, this depends on performance of car, how it stabilizes and user reviews of initial performance once it hits the roads. In last, Time will tell how the future of this move pans out. So far the initial response for the product has been mostly positive.

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SUGGESTIONS AND RECOMMENDATIONS

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SUGGESTIONS AND RECOMMENDATIONS

1. Tata should increase the production of NANO so that customers dont have to wait much for their car, as they feel urgency for NANO. 2. Tata should produce Nano in other manufacturing unit also considering the demand of Tata Nano. 3. As people believes that NANO is peoples car, and will be affordable by common men which was a dream earlier for them. So the price should be kept stable in future with the increase in price of raw material. Otherwise it will be out of their reach and people believe in Mr. Ratan Tatas statement of- Promise is a promise. 4. Tata should give exchange offer against a two/four wheeler so that those consumers can be easily converted to NANO users. 5. Safety measures can be enhanced, because people consider it as their prime concern while purchasing. 6. An option for customization should be available.

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LIMITATIONS

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LIMITATIONS
1.) The geographical segmentation was our limitation as we have restricted our

research to Gandhinagar only. 2.) Timing was limiting factor for the study. Time chosen was too short to prepare

report and to meet respondents. 3.) Respondent bias was another limitation of the study. Respondent may not have given us

accurate information which was a constraint of our research. 4.) Resource constraint was another limitation due to which we are unable to do in depth survey. 5.) Non Probability Convenience Sampling Techniques which has serious

limitations. Convenience samples are not representative of any definable population. Hence, it is not theoretically meaningful to generalize any population from a convenience sample.

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BIBLIOGRAPHY

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BIBLIOGRAPHY
BOOKS AND NEWS PAPER:

Naresh Malhotra. , Marketing Research-An Applied Orientation, FOURTH EDITION, Pearson publication, pp 30-367 Philip Kotler & Keller Marketing Management, TWELTH ADDITION, Economics Times , Business Standard , ICFAI General , Gujarat Samachar and Divya Bhaskar

SOURCES FROM INTERNET: www.tatamotor.com http://tatanano.inservices.tatamotors.com/tatamotors/ http://en.wikipedia.org/wiki/Tata_Nano http://www.tatanano.in/ http://www.cardekho.com/carmodels/Tata/Tata_Nano

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