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Old 24th March 2010, 10:44   #61
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Originally Posted by CARDEEP View Post
Well Suzuki can make a car which could be cheaper than the existing 800. But, still i would be costlier than the Nano.
They can very well sell the 800 at the same price as a nano! They only have to reduce their margins, and forget the killing they were making all these years.
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Old 24th March 2010, 10:58   #62
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They can very well sell the 800 at the same price as a nano! They only have to reduce their margins, and forget the killing they were making all these years.
I Don't think so , Maruti has vendor base for all the components of 800 here if it was that simple to reduce the ex-factory price of base version by 50% ( 2 lakh to 1 lakh) they would have done by now.


Also Tata could have picked same existing vendors for components such as alternators , windshield , wipers , seats , rims and what not and made a cheap car with different body shell design. Dawoo Matiz was one such car with nearly identical engine as M-800 and sharing a lot of components.

But to keep the ex-factory price at 1lakh ( means Bills of Material cost to be around 50-60 K approx) they had to do some serious innovations like rear 2 cylinder engine which can deliver nearly same power as M-800. They filed some 32 patents for the same.

Vendors are same Bosch , Lucas TVS etc but components are entirely new.

So it is clear Maruti is unable to do this value engineering.
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Old 24th March 2010, 11:03   #63
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@amitk26

The deluxe model of the 800 sells more or less for the same price as the top end nano, does it not? And forget the price of the base nano, it is artificially kept there for the time being, to keep a promise made! And that model sells much less than the higher end ones.
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Old 24th March 2010, 11:17   #64
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Originally Posted by Gansan View Post
@amitk26

The deluxe model of the 800 sells more or less for the same price as the top end nano, does it not? And forget the price of the base nano, it is artificially kept there for the time being, to keep a promise made! And that model sells much less than the higher end ones.
I think otherwise base model of nano still covers the basic price + modest profit where as top model has more profit margin.
Every company is answerable to share holders ( at least majority holders in india) , TML can not keep price artificially low for words of Ratan Tata who owns less then 3% of TML.


The base price of Car or any product includes the bills of material + running costs such as labour , water , power + fixed costs ( plant and machinery costs) + Advertising and marketing costs.

In case of Maruti 800 Fixed costs should be almost zero as model is there for more then 20 years, Maruti -800 std used to cost 2.16 laks in 1998 and it still costs nearly the same despite high inflation and steel cost going up the roof. Reason is depreciation on fixed costs allow them to keep the price constant. But there has to be an inflection point between the curve of falling fixed costs and rising input costs means beyond which they can not keep the operation profitable.

So in 2010 i think that point is crossed , Maruti can not increase price of 800 because nano is there but it can not lower the cost because input costs will not allow that to happen so the only option is to discontinue.

In case of nano fixed cost should be very high specially when plant and vendors have to move from Singur to another location, despite this high fixed costs they are able to sell means material cost is kept low.

Did you compare the features of top end nano and 800 deluxe model ?

Last edited by amitk26 : 24th March 2010 at 11:19.
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Old 24th March 2010, 11:23   #65
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I think Ratan Tata said the prices will be kept at the promised level for the first 100k cars. That means they will increase after that.

I did compare the features of both and the nano does come out top! But I don't think the nano's engine compares favourably with that of the 800's - yet! And in my book, a car is an essential appendage built around the engine!
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Old 24th March 2010, 11:29   #66
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Originally Posted by Gansan View Post
I think Ratan Tata said the prices will be kept at the promised level for the first 100k cars. That means they will increase after that.

I did compare the features of both and the nano does come out top! But I don't think the nano's engine compares favourably with that of the 800's - yet! And in my book, a car is an essential appendage built around the engine!
100K car is quite big number , There is no way they can sell 100K cars at loss just for words of Ratan Tata. 100K is nearly 1/10th output of Maruti Suzuki Ltd and is much much more then total output of many other players.

Companies typically raise price after couple of months and sale of few hundred At the same time it is stupid on part of Auto journos to ask any industrialist how long you will sell at same price. When Tata responded with 100K it means he is sure that company makes profit there.


an engine which has less CC consumes less fuel , Costs less but churns out nearly same power and is less polluting compares less favorably to you ??

Guess what , Nano made headlines across the world due to the innovations in it , A 2 cylinder engine which is still balanced and produces decent power is one of them.

Engine sound is least important aspect to rest of us.

Last edited by amitk26 : 24th March 2010 at 11:33.
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Old 24th March 2010, 11:32   #67
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Ha ha, but the exhaust note is very important to me! And when the nano engine lasts 100k plus KM, I will accept it as good!

And they are not going to sell 100k cars for Rs 100k! The base model will constitute may be 1/3 rd of that number. And they make it up in the higher end models!

Last edited by Gansan : 24th March 2010 at 11:37.
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Old 24th March 2010, 15:30   #68
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Quote:
Originally Posted by airbender View Post
Looks like we have another Osamu Suzuki on the forum.
Try answering these 2 questions

1.Why has the sales of A-segment cars which was 55% of total sales till
5 years back, gone down to 24% today?
wheras B-segment sales have increased to 33%.

2. Why does an Indian with an income of less than 10k/month buy a 100c bike
when he can buy a moped and save his hard earned money?

I don't think you would want to answer these,
but would rather post something deriding the person who posted it
rather than argue about the post.

Quote:
Originally Posted by airbender View Post
Now that Nano is a reality you argue there will be no market for that product.
I'm not saying there is no market for nano.
It will sell in large numbers, maybe even 4-5 lakhs per year.
But will TATA be able to sustain that number after 2012 when the hype about
the car would have died down.

At the same time Maruti which is offering 8 cars in the 2-4L range
would have sold 10L cars/year. Infact they have achieved that feat this year itself.
They would have done all these calculations and that is why they aren't
in any hurry to build a competitor to Nano.

Quote:
Originally Posted by airbender View Post
Serving the Bottom of Pyramid is one of the best ways to reduce poverty.

Buying a car at 1.5 lakhs and discovering after 3 years that the car they bought
will fetch only 50k in the used car market will only increase his misery.
See this article about nano's resale value. http://www.vicky.in/straightfrmthehe...ed-car-market/

Do remember that an Alto with 25k on the odo commands a much much higher price
than an Indica with a simliar 25k on the odo eventhough a new Indica costs 50K more.

Quote:
Originally Posted by airbender View Post
Go look at all the initial ownership reports.
The intended target segment of Nano doesn't sit in an office with free internet access
and write ownership reports in the net. It is the 2nd car segment which writes all these
and is upbeat about Nano, because now they have a new toy for using and disposing.

Quote:
Originally Posted by airbender View Post

What car you like or would like to own or own is a personal choice.
That does not mean you can deride cars below your segment. If you are not
happy with someone not as rich as you sharing the road with you then keep it to yoursefl.
don't interpret things to suit your arguments and appear "holier than thou".
Nobody who has posted earlier said anything deriding Nano because it costs 1.5L.
If so, we woudln't be saying anything good about an 800 or Alto.

Quote:
Originally Posted by airbender View Post

Hero Honda is trying to do a Nano in the Motorcycles segment.
Hero Honda has already done a Nano 25 years back with CD100.
Any attempts to go lower than this has flopped.
Remember the Bajaj BYK which was launched at half the price of a CD100.

Quote:
Originally Posted by airbender View Post
Caluclate the EMI one pays for a Nano and Alto on the loans
offered by SBI, you will know the answer.
All the 2.5Lakh people who bought an Alto this year
would have calculated the EMI's before opting for it.
Lowest price is not the only deciding factor for a product's success.
If so, everbody who earns less than 1L/year will be buying only chinese mobiles
and not Nokias. The office boys in my office flaunt cellphones which
cost twice their monthly salary!!!

Just like mobiles, a car you own is also a way to say, "i've arrived in life"
It applies to all from the richest to the poorest.
Though there are few exceptions like taxi operators whose criteria for buying a car
is only profit margins and nothing else.

Last edited by Daewood : 24th March 2010 at 15:46.
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Old 31st March 2010, 01:02   #69
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Quote:
Originally Posted by Daewood View Post
Try answering these 2 questions
Quote:
Originally Posted by Daewood View Post

1.Why has the sales of A-segment cars which was 55% of total sales till
5 years back, gone down to 24% today?
wheras B-segment sales have increased to 33%.

I don't think you would want to answer these,
but would rather post something deriding the person who posted it
rather than argue about the post.


ANs: To answer you first question, I have copy/pasted this from an other post.
1. Nissan - Ashok Leyland

Nissan is in talks with Ashok Leyland to develop a global small car costing under Rs 2.5 lakh. The two are in an alliance for light commercial vehicles and the small car could be an extension from one of the platforms.

The Hindu Business Line : Nissan to build Rs 2.5-lakh car with Ashok Leyland

2. Maruti Suzuki (speculation)

The launch of the 'Cervo' as Maruti's next gen low cost product has been doing the rounds in blogs, but there has been no confirmed news from any large media house. Im sure that maruti will be preparing for a successor to the 800/alto though


3. Hyundai

Hyundai Motors is lining up a new release for India that is likely to be priced not much higher than that of Maruti’s cheapest variant, the Maruti 800. The vehicle, which will be launched in the second half of 2011.

Hyundai to take on Maruti 800 next year


4. Renault Nissan - Bajaj

The Renault-Nissan combine is already working on an ultra low-cost car project with Bajaj Auto where the base version would be under Rs 2-lakh and will take on the Tata Nano. The CEO Carlos Chosn referred to the staus of this alliance, saying "it is moving along. We are negotiating the contract". However, there have been varying reports about the ability of the partnership to engineer the car. Nissan's executive vice-president Collin Dodge was quoted as saying "The physics of it is very difficult. We have not yet found a solution as there are lot of engineering solutions required"

The Hindu : Business News : Ghosn defends multiple alliances
The Hindu Business Line : Carlos Ghosn says small car will be priced lower than Nano
Nissan's Nano rival 'on track' - Autocar.co.uk


Why do you think these people are pouring billions of dollars into this segment. Let's talk about A, B segments.

How many products were launched in A & B segments in the last 5 years?
A: Zero to many. I would not consider Nano to be launched yet(full production is yet to start). How do you expect the segment to grow with out any new launches. If you want to compare, do a apples to apples comparision. Why is it that others players are moving only after Nano is Launched.

2. Why does an Indian with an income of less than 10k/month buy a 100c bike
when he can buy a moped and save his hard earned money?
How many options does the buyer have below 100CC segment?



Ques:I'm not saying there is no market for nano.
It will sell in large numbers, maybe even 4-5 lakhs per year.
But will TATA be able to sustain that number after 2012 when the hype about
the car would have died down.

Ans: This is like using a big enough bat so not to miss the ball. No product takes four years for the hype to die down. If Nano sells in 4-5 lakhs upto 2012, then that would be a blockbuster. In other words you by yourself agree Nano is a blockbuster.

Ques: At the same time Maruti which is offering 8 cars in the 2-4L range
would have sold 10L cars/year. Infact they have achieved that feat this year itself.
They would have done all these calculations and that is why they aren't
in any hurry to build a competitor to Nano.

Ans: This is why I said you sound like Osamu Suzuki. Why don't you agree they can't? Maruti's market share has gone down from 80% a Decade back to 43% last year. If it will go down even furthur, I am sure they will comeup with a car cheaper than Alto if not cheaper than Nano.




QUES: don't interpret things to suit your arguments and appear "holier than thou".
Nobody who has posted earlier said anything deriding Nano because it costs 1.5L.
If so, we woudln't be saying anything good about an 800 or Alto.

ANs: THis is from your own post:
1. A car that looks and feels like any other car and doesn't look like an AutoRickshaw with doors.
3. A car which he will flaunt as his own at an extended family get-together.

You say Nano is a AutoRickshaw with doors. You say one cannot flaunt Nano at his extended family get-together. You again say you are not deriding Nano. Please go ahead and look at ownership reports and you will see how those owners flaunt their Nano. It is clear now that I am not interpreting things to suit my arguments.





QUES: All the 2.5Lakh people who bought an Alto this year
would have calculated the EMI's before opting for it.

ANs: We will see the impact once Nano is in full production and other variants are avaliable. Nano already killed M800. It has to be seen how Alto will be impacted once diesel Nano is launched.


QUES:If so, everbody who earns less than 1L/year will be buying only chinese mobiles
and not Nokias. The office boys in my office flaunt cellphones which
cost twice their monthly salary!!!

Ans: You cannot generalize these statements. If what you say is right everyone will be buying a BMW or an AUdi. If one is buying a cellphone which cost twice their monthly salary, a car 10 times their salary where does he get the money for the rest? We have seen what happens if one takes excessive credit.
Let me quote something from my other post:

I see a lot of people passing comments like this. I live in a market where hatchbacks are not considered as car. I ask all these people passing this comments, did you go through the owner ship reports by nano owners. Answer for the most will be a No. IF yes, why is that no one feels the same way as you did. These Nano owners(from the ownership reports) are proud of their baby the same way as a BMW or a Audi owner. Why?

A person driving a Vista or a Swift may not feel Nano is a complete car. Manza owners may feel the same about Vista or Swift. Like City or Altis about Manza. Audi or BMW about City. Ferrari about BMW or Audi. Every one wants to drive a Ferrari but they cannot afford it. For me it makes perfect sense if a Ferrai or a BMW owner says Nano is not complete car. But some of the persons passing that statement happen to own a 800 or a Alto. What makes you think the extra 2 inches makes you feel your car is big or Safe?

In a market where majority of sales come from hatchbacks(majority with out airbags) I don't understand what makes poeple pass that comment.

There are so many cars in Indian which are not safer or not much bigger than Nano. But we only complain only about Nano.

I am happy you can afford a car pricier than Nano but that does not give you the right to deride Nano.

Last edited by airbender : 31st March 2010 at 01:13.
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Old 31st March 2010, 10:19   #70
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@airbender
The country you live in does not have that unique phenomenon - autorickshaw - either, to which comparisons will inevitably be drawn in India. I don't deride the nano, I merely stated the reasons why I did not buy it. And the main reason for me was the auto like exhaust sound. I see many happy nano owners and I am indeed happy for them!

I repeat what I posted earlier; the nano feels almost like a car, but not quite,because of the exhaust note. To me, that is! There are many who will overlook it and happily buy the nano, and I am happy for them. Can this be called status consciousness? May be, may be not. It put me off because the auto is a vehicle I absolutely hate! But if you observe closely, in any make/model, it will be the top two variants that will sell more than the base ones. And the nano is no exception to this rule!
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Old 31st March 2010, 10:27   #71
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Quote:
Originally Posted by Daewood View Post
Try answering these 2 questions

1.Why has the sales of A-segment cars which was 55% of total sales till
5 years back, gone down to 24% today?
wheras B-segment sales have increased to 33%.

2. Why does an Indian with an income of less than 10k/month buy a 100c bike
when he can buy a moped and save his hard earned money?
I think you have answered why a prospective Bike customer might go for a Nano
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Old 31st March 2010, 10:33   #72
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Quote:
Originally Posted by Daewood View Post
Try answering these 2 questions

1.Why has the sales of A-segment cars which was 55% of total sales till
5 years back, gone down to 24% today?
wheras B-segment sales have increased to 33%.
Try answering this first

Is 24% of today's market not bigger in absolute terms then 55% of the market 5 years back ?

Now if there are new car launch with new features in A segment is there any evidence that it will not expand further then 24%,

Bottom of Pyramid strategy banks on the total numbers rather then capturing market share.

As you are citing example of Hero Honda CD 100 and Mopeds but they are two different markets.

There is a strong resmbelence between story of Hero honda ( 100CC) and nano.

Let me referh history of Hero Honda CD100, I was only a kid then but I clearly remember. When it was launched Bullet 350 , Rajdoot 250 , Yamaha 300 and Yezdi ruled the roost.
Hero Honda was derided for being puny and for kids and not a bike enough for man. At that time the 100CC bikes were cheaper then big iron hulks and in the bigining they were mearly seen as aspiration fulfillment vehicle for teens.

Once the japanese bikes established themselves in 2-3 years there was a comparison and Hero Honda was again derided for being punny.

The competition in this segment was Ind-Suzuki AX 100 R ( later became TVS suzuki) and Yamaha RX 100 and Kawasaki Bajaj KB-100.

Interestingly Hero-Honda CD100 was 4 stroke but only 85 CC so there was a famous court case and HH removed claims of being a 100 CC bike.

Over a period of time KB-100 disappeared untill Bajaj came up with Pulsar, AX-100R evolved to Samurai and was no 2. And the punny CD100 evolved to splendor which was market leader.

Once the Yezdi , Rajdoot and Yamaha were wiped out and bullet merely survived the prices of 100 -125 CC bikes zoomed from 20-30 K range to 40-50 K.

I see nano in same stage as hero-Honda CD 100 was in mid 80s.
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Old 31st March 2010, 11:20   #73
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@amitk26
The HH was always 97.xx cc, never 85 cc! And you are right, all 100 cc bikes were looked down upon when they were launched, derided as mere mopeds. But the question foremost in everyone's mind was about their longevity, as there was a whisper campaign that these bikes (as well as the M 800) will be disposable after five years! When that doubt was dispelled from peoples' minds, and the FE figures became apparent, there was no looking back. I cancelled my booking of the CD 100 as my initial allotment number was ~1,46,000 and bought an AX 100 for Rs 12999/- on the road!

I agree that the nano story will be similar. But with an exception - it will not drive any player (two or four wheeler) out of existence, but will thrive at the bottom of the pyramid. Remember ,doom was predicted for the bike market when the nano was announced, but what happened? And the Alto/Eeco (as well as similar cars from others) will be priced aggressively, within striking distance of the top end nano. Just for info, my b-in-law paid Rs 20k more for his Alto LXi in 2004 than what I paid for mine in 2009. In that sense, the nano was a game changer, no doubt about that!
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Old 31st March 2010, 19:30   #74
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@airbender
The country you live in does not have that unique phenomenon - autorickshaw - either, to which comparisons will inevitably be drawn in India. I don't deride the nano, I merely stated the reasons why I did not buy it. And the main reason for me was the auto like exhaust sound. I see many happy nano owners and I am indeed happy for them!

I repeat what I posted earlier; the nano feels almost like a car, but not quite,because of the exhaust note. To me, that is! There are many who will overlook it and happily buy the nano, and I am happy for them. Can this be called status consciousness? May be, may be not. It put me off because the auto is a vehicle I absolutely hate! But if you observe closely, in any make/model, it will be the top two variants that will sell more than the base ones. And the nano is no exception to this rule!
In the country I live in hatchbacks are the autos(fun intended). I only added that sentence(not on this thread) to give the forum a perspective of an customer. I too think Nano won't drive out anyone out of the market. If Tata can price diesel Nano properly I do think it will impact Alto. I never meant you derided Nano. That comment was not aimed at you. I read your opinion on a different thread & I think that's a fair opinion. Tata is coming with Nano V2. It's good that you got an Alto. What if you can't afford an Alto? Nano is for those people. I think Nano is an ideal car for small cities.

Infact when Nano was launched Ratan Tata was asked what is your biggest challange?
He said 'to make customers understand that Nano is not a Honda.
Customers do understand that but it's the non-customers who pretend not to.

Last edited by airbender : 31st March 2010 at 19:49.
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Old 6th April 2010, 20:06   #75
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Thought this would help.

Tata's $2,500 Nano an object of fascination for rival carmakers - Los Angeles Times

Also saw an article on Maruti launching Cervo to compete with Nano. Why does the indian media keep speculating about this even when Mr. Suzuki himself denied it.

Maruti Cervo | Rival Tata Nano | Low Cost Car | Standard Features - Oneindia Living
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