A nano for you, a giant leap for Tata

IIPM, GURGAON

Now, can Tata Motors get its future strategy right?

Globally, car buyers are thrilled with this product. Most experts and critics, who scoffed at the idea, are enthralled. Existing and future competitors are excited, but are unwilling to concede any adverse impact on their sales, either in India or abroad. Consultants and research agencies think that it will lead to a mega boom in the Indian automotive market. But it is Ratan Tata, Chairman, Tata group, who – after having unveiled the world’s cheapest car, Nano – is having the last laugh. At the moment, he’s having his cake and eating it too or, shall we say, having his car and well-positioned to sell it too.

At a Rs.1 lakh ($2,500) tag for his new car, Ratan Tata has created a paradigm shift in the auto industry. Now, every giant in the US, Japan, and East Asia is striving to produce a cheap model. Many of them have decided to set up R&D centres in India to develop global models. For once, Tata has proved that India can manufacture a global brand. The Nano, it seems, can become the first ‘Made in India’ global brand in modern times. Forget Basmati, Neem, Kohinoor, Taj, and Kamasutra, welcome to the giant world of Nano. Think of Tata’s empire as the first truly globalised Indian conglomerate.

But let’s start this adventure with Nano’s potential customers, who are obviously the kings, or queens. The day the Nano was unveiled at Delhi’s Auto Expo last week, there was absolute chaos everywhere. The mayhem started right from the parking lot itself. Even reaching the entrance of Pragati Maidan, the venue of the launch, was an arduous task as the overhead pass was jammed – not with vehicular traffic, but with people.

The scene outside Hall No. 11, where the Nano was to be unveiled, was electric. There were 300-400 people waiting to catch a glimpse of the Nano. Some like Ashok Bayana, a resident of Rohtak (Haryana), had come to buy the car that was being sold for Rs.1 lakh. Bayana had heard that it would be sold in Hall No. 11. He was even carrying the money for the initial payment. “Yahan ek lakh ki car milti hai, phir to bayaj or kisht bhi kaafi kam hogi (The Rs.1 lakh car is available here, then the interest and installment will also be less),” he whispered.

Now that’s what the Nano can do in the market place. It can attract customers, who had possibly only dreamt about owning a car. It can woo people, who will be walking around with their cheque books and cash, to simply buy it off the shelf. It will encourage the Bayanas to simply walk in, and walk out of Hall No. 11 with a Nano. It will fuel the dreams of millions of Indians. It will create a bigger chaos on Indian roads, the way it did when it was showcased in Hall No. 11 on January 10, 2008. But then, will it really do all these? 4Ps B&M analyses a few issues that will decide Tata’s and Nano’s fate.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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