The Tata Nano & India's 2-wheeler industry

[ananthkamath]

This thread is an open discussion about how the Tata Nano, when it is available to the public, will affect 2-wheeler sales. Mods, I felt this is the forum to post this topic in; however, if you disagree, please feel free to move it.

These are the types of questions I would like people debating on:

Back home everyone's talking about this neat little car and how it will solve a lot of people's personal transportation problems. But what does that mean for the 2-wheeler industry?

Is Bajaj's car low-cost car concept a knee-jerk reaction to the Nano? Are they afraid it will cannibalize not only their 2-wheeler, but also their 3-wheeler sales (which it will, I'm sure; consider that your average polluting autorickshaw costs more than the Nano)?

Will the 2-wheeler market as we know it today be reconfigured into something else?

Will the high-end motorcycle market be affected at all? Or will it be just the commuter market, with the target consumer "saving up" to buy the Nano instead of your typical commuter motorcycle/scooter?

Will the 2-wheeler industry be forced to rethink their pricing strategies?

How important are operating costs to the target customer?


Fire away, guys.

[CrAzY dRiVeR]

Most of the things have been under discussion in this thread- http://www.team-bhp.com/forum/indian...ty-impact.html

But what does that mean for the 2-wheeler industry?

It WILL have an affect on the two wheeler industry. For example, here my parents are seriously considering selling my bike and getting the Nano.

Its safer, seats four, looks good and is small enough for city use.

but also their 3-wheeler sales (which it will, I'm sure; consider that your average polluting autorickshaw costs more than the Nano)?

Thank God if 3- wheeler sales come down. They are one of a kind, going through all gaps where the front wheel will go.

[ananthkamath]

Yes, but the objective is only to look at this from the point of view of a biker or a 2-wheeler customer.

[khanak]

Originally Posted by ananthkamath

]
Will the high-end motorcycle market be affected at all? Or will it be just the commuter market, with the target consumer "saving up" to buy the Nano instead of your typical commuter motorcycle/scooter?

I dont think the Karizma or P220 market will be affected that much. Buyers in this range are usually very image concious and a Pulsar or Karizma somehow has a more upmarket imagine compared to the Nano.

The more conservative commuter bike sector would surely be affected, Im sure there are a tonne of people who can afford to spend that little extra for a car but dont want to buy a used 800 or anything.

The real effect of the Nano will show up once it enters the second hand market. Imagine 2-3 years down the line when you will be able to buy a 2 year old car for ~50k.

[sunilbakshi]

the Tata Nano production capacity is much lower than the two wheeler market size ... something like 40-50 lakh two wheelers are sold a year in India, worlds second biggest two wheeler market..

Tata dealers expect that the Nano may be sold out for 2-3 years as soon as bookings open. Demand is likely to be much much bigger than supply. doesnt take a genius to figure that out. at the expo, many buyers for nano had arrived with bagfulls of cash to make their booking, even though bookings arent open yet..

hope dealers dont turn this into a black market situation

So crazydriver, if your folks are considering buying one, they better get ready to be in line already!

[rr_zen]

Originally Posted by sunilbakshi

Demand is likely to be much much bigger than supply. doesnt take a genius to figure that out. at the expo, many buyers for nano had arrived with bagfulls of cash to make their booking, even though bookings arent open yet..

hope dealers dont turn this into a black market situation

Therfore, with the apparent demand supply gap, it wont be long before the Nano loses its title as the 1 lakh car. An increase in price is one of the imminent outcomes of a such a situation. Lets wait and watch.

[khanak]

Originally Posted by rr_zen

Therfore, with the apparent demand supply gap, it wont be long before the Nano loses its title as the 1 lakh car. An increase in price is one of the imminent outcomes of a such a situation. Lets wait and watch.

I dont think Tata would increase the price so I guess it still officially remains the 1 lakh car. Lets hope a black market isnt created due to the supply shortage?

How sure are we about this shortage? I remember reading that the Nano will be made in 4 plants across the country, one of them being Shingur.

[Mpower]

Here is my analysis copied from another thread.

The price of the car is definitely tempting, but the question to ask is...can someone who is used to 60kpl from their 100cc afford 20 kpl from the nano as a daily runabout? I know many people who can afford to buy an used M800 (v good condition) for 1 lakh but prefer their 100cc because they cant afford the running exp and maintenance. So 2 wheelers need not be worried too much but they should offer more value or cut prices by 5-10%

[CrAzY dRiVeR]

Originally Posted by khanak

How sure are we about this shortage?

Atleast initial demand would be hard to meet.

Papers here were reporting that around 120 people went to the dealer in TVM with money to book the Nano, and were disappointed to know booking haven't started.

[rider60]

Originally Posted by sunilbakshi

the Tata Nano production capacity is much lower than the two wheeler market size ... something like 40-50 lakh two wheelers are sold a year in India, worlds second biggest two wheeler market..

Tata dealers expect that the Nano may be sold out for 2-3 years as soon as bookings open. Demand is likely to be much much bigger than supply. doesnt take a genius to figure that out. at the expo, many buyers for nano had arrived with bagfulls of cash to make their booking, even though bookings arent open yet..

hope dealers dont turn this into a black market situation

So crazydriver, if your folks are considering buying one, they better get ready to be in line already!

i just hope they dont compete with the three wheelers, else the traffic would be much worse, but on the bright side there will be lesser pollution!, lets wait and see what happens!

Well yes there is going to be the black market situation, its there for even the swift, be it petrol or the diesel!

[rks]

Originally Posted by rider60

i just hope they dont compete with the three wheelers, else the traffic would be much worse, but on the bright side there will be lesser pollution!, lets wait and see what happens!

When competing with 2-and 3-wheelers, there is one aspect of the Nano that is a bit of a disappointment - its minimum turning radius of 4.4 m. The much bigger Santro has the same minimum turning radius, while the bigger M800 has a turning radius of 4.2 m. I wonder why Tata didn't invest some efforts to address this issue and make Nano unbeatable in this respect. E.g. some time back I saw a novel Western concept in which the rear wheels can be made to acquire turning capability while parking. Of course such technologies would probably push up the cost of the car.

The three-wheelers still have a big advantage over the Nano in terms of maneuverability. I have seen many congested streets in Pune where this factor would be very important. E.g. if you want to venture into Lakshmi road during one of those festival days, the auto will still be the only viable vehicle for a family.

[snaronikar]

This will certainly have an effect on the 2 & 3 wheeler industry.

In 2 wheeler industry, it mostly sells due to college students or the families who cannot afford to buy a car. But this car has made people think about this. Thus, a family of 4 who now travel in bikes/scooters, will certainly go that extra bit and invest in 1 Lac car rather than buy a 2 wheeler as the car is more safer than the 2 wheeler. The parents who buy the bikes to their children will think twice about the safety of their children of driving in bike and driving in car. This alone will act as a deterrent on Nano. They would prefer to buy a Nano instead of a 2 wheeler.

Now, coming to 3 wheeler, it will certainly affect as currently the office goers and other people who use autos, will definately think twice before boarding an auto and will decide to go for Nano some day or the other. car.

[BaCkSeAtDrIVeR]

The ACE has certainly cut into the sales of 3 wheeler cargo market. Now the nano will do the same for the 3 wheeler passenger segment. Of course, there are people who will continue to buy and use 2 and 3 wheelers.

My take:-

1. Premium bike market will not be affected.
2. Family weekend outings on 2 wheelers will come down or probably, to a stop - people will prefer the nano.
3. 2 wheeler market will be affected; but not the prices. Cutting prices will not help the 2 wheeler industry. Single youngsters will continue to buy the 2 wheeler and upgrade to the nano if the spouse insists. A person buying an automobile for the first time after marriage will however, go in for the nano rather than a bike. A bike, however cheap, will not even be considered by this category.

4. For the high income families, the low end hatchback market will be seriously affected. At least in some families, instead of going for one hatch to be shared by multiple members, there will be two or even more cars for exclusive use of each member. This is particularly true in case of families which already have vehicles of different capacities.

For example, at least some families with a sedan and a van type vehicle (Safari, Innova, Sumo, etc) will now replace the sedan with two or more Nanos for daily use; and retain the bigger vehicle for highway / family travel.

[Steeroid]

Originally Posted by ananthkamath

Back home everyone's talking about this neat little car and how it will solve a lot of people's personal transportation problems. But what does that mean for the 2-wheeler industry?

Originally Posted by ananthkamath

Is Bajaj's car low-cost car concept a knee-jerk reaction to the Nano? Are they afraid it will cannibalize not only their 2-wheeler, but also their 3-wheeler sales (which it will, I'm sure; consider that your average polluting autorickshaw costs more than the Nano)?

This is very obvious. Bajaj will be very very scared, especially after Autorickshaw driver unions in various cities have already filed requests with their respective RTOs and Transport commissioners to let them use the Nano with the same 3 wheeler operator permit when it is launched.

Originally Posted by ananthkamath

Will the 2-wheeler market as we know it today be reconfigured into something else?

I think so. Those 'Executive Commuters' with 10-15 cc more than regular commuters will be the hardest hit since they are overpriced. Hopefully that breed will disappear. The low-end super-econo commuters which give you 80+ kms per litre will survive and hopefully the two-wheeler manufacturers will be forced to offer real bikes for the high-end consumer rather than the sticker-jobs they do these days.

Originally Posted by ananthkamath

Will the high-end motorcycle market be affected at all? Or will it be just the commuter market, with the target consumer "saving up" to buy the Nano instead of your typical commuter motorcycle/scooter?

Not a chance. A person who goes out to buy a Pulsar 180/200 or a Karizma wont be caught dead in a Nano. Hopefully the high-end market will become more active - this might result in the 'high end' losing its current premiums, though - as more manufacturers crowd into what has hitherto been a niche.

Originally Posted by ananthkamath

Will the 2-wheeler industry be forced to rethink their pricing strategies?

Yup. Anything more than 50k would mean that the buyer is tempted to think in terms of an EMI upgrade for a Nano.

Originally Posted by ananthkamath

How important are operating costs to the target customer?

Very. That is why the super-economy bikes will not be hit - even if they have to rethink pricing.