PLEASE READ CAREFULLY.
Some very important points to consider before we discuss this matter.
- I am not doing any product bashing nor showing any fanboyism, and I also expect the replies to be unbiased and adhering to the aforementioned criteria.
- This is an open discussion topic, so constructive criticism is all what is allowed. No personal attacks or hurting the sentiments of nano owners is allowed. Its their decision and I respect them.
- What I am looking for is serious discussions which will help us to study this case and contribute towards devising the best possible solution.
- This discussion DOES NOT involve any direct or indirect marketing for tata motors or its peers. If they are watching this thread, the message is just clear-its only discussion on paper and to bring out the best out of the creative minds.
- Most important-perceptions of me or those who reply may vary and need not necessarily remain the same. What I may agree with can be disagreed by others and vice versa, so everybody is entitled to his/ her perception, taking the constructive criticism criteria in mind.
- Don't fret at the title of the case. Its based on facts.
The case:
END OF THE ROAD? Tata Nano.
A dream project of "motorization for all."
A dream conceived by Mr. Ratan Tata, known for out of box thinking and taking challenges positively and coming out triumphs. Whether it was the safari, the indica or the indigo, these were the products that were singularly responsible for putting India in the world map and earning global recognition as an automotive powerhouse. Unimaginable at one time, India is now one of the few nations on earth that can conceive, design and manufacture cars on its own, thanks to the abundance of talent that we have.
But sadly, car ownership is something that our country still lags behind, especially compared to the EU and the Americas. Just 8 or 9 in a thousand people own a car. Many of them either own a two wheeler or have to rely on public transport, still not developed or convenient in semi urban or rural areas despite the recent growth trajectory in this sector. It was this necessity that envisioned Mr. Ratan Tata, chairman of tata sons, to embark upon doing the impossible.
The mission: to design, conceive and develop a car costing no more than rupees one lakh for the base model. The psychological price barrier of one lakh immediately made news globally in 2006 when Ratan tata announced this project at the auto expo 2006. The automotive media went aghast, berserk and skeptics started to question Ratan tata's "sanity level". Critics even went to question his vision and challenged that the project would never take shape and the car will be doomed even before it was born.
But behind the curtains, the project was taking shape in a chamber of secrets. Undeterred by all the negative publicity and alarming raw material prices, the project went ahead full steam and the dream as beginning to shape up as a reality.
January 2008. Auto Expo, Delhi.
The world is waiting, and waiting, and getting impatient. So is the crowd, waiting in lakhs outside Hall number 11 for Mr. Tata to unveil his "lakhtakiya" car to the world.
The car is unveiled to the world and the first impressions are shocking. People celebate, grin and applause the achievement. An achievement called the
Tata nano.
Overnight it becomes the rockstar of the global automotive industry. It makes more news than any other car launch has ever mad before. All critics applause India in this achievement, though some skeptics and "environmentalists" now begin to question the availability of mass motorization and how much the nanos would add to the already clogged streets of India, making them more chaotic. Critics be damned, Tata claims that the nano will be the least polluting in its class.
Geneva 2008.
The nano makes its first overseas premiere. The press kits a distributed within minutes and demand is so high, Tata had to get 7-8 times more copies printed than it originally intended it to. So high is the craze and even there it gets a big thumbs up. Round won by Tata.
Now comes the center of controversies surrounding the car.
- The plant in singur, west bengal is in final stages of completion with planned capacity of 2,50,000 cars per year. Prototypes are built on a makeshift assembly line and shown to the press. But as soon as the time for launch lies near in q4 2008, disaster strikes. Mamta Banerjee's allegations of land acquisition from farmers and subsequent events (no point telling all) drives the factory and nano project out of bengal for good. Launch delayed by six months.
- March 23, 2009. ratan tata starts production of nano from a makeshift assembly line at pantnagar, UP and launches the car in three variants, priced between 1,23,000 to 1,75 000 approx. The "one lakh" price is ex factory, India for the non AC model.
- Dealers are astounded and they expect about 10 lakh bookings. Talk about having their own cake and eat it too.
- Meanwhile, thanks to the positive and favorable policies of Mr. Modi, tata announces the relocation of the nano plant in sanand, gujarat.
- Word has it that the residents of singur never wanted the nano project to be driven out of west bengal, it was done as a kind of "political motive". (No point in indulging in political discussions as it can be sensitive and against team bhp rules)
- Bookings open and booking amount is 95 percent of the car's ex showroom price.First step towards devising a wring strategy perhaps? Your target customer is first time car buyer migrating from 40 thousand rupee bikes and expecting him to deposit 90 grand as a booking amount is something which I cannot digest. Did tata motors wanted to control the number of bookings to as minimum as possible to avoid the huge with periods and subsequent production pressures?
- Maximum number of bookings, 55 percent to be precise, was of the top end CX model and the least priced non AC model just netted 20 percent bookings. What went wrong? Wrong market analysis or wrong perceptual analysis?
- Only 2,03,000 nanos were booked as against the humongous dealer expectations of 10 lakh. What was to blame? wrong marketing strategy and too much urban promotion?
- many of those who booked cars were either rich people tempted to own a slice of automotive history or people with multiple cars, having to look for a second or a third car for short work or congested city driving, one of the car's USP.
- Very minimal bookings came from the original target customers-first time car owning aspirants. The big question was, why? The huge booking amount and financial pressures plus loan EMIs to blame?
Sales start in July 2009 and the first one lakh allottees are selected through a lottery system and they are promised price protection, that is, irrespective of delivery date, they would get the cars at the original prices.
Engineering wise, the nano was perhaps the best overall car ever produced by Tata, even found out when I tested the car way back in q4 2009. Given the
price restrictions bracket and restricted engineering challenges, it was nothing short of a masterpiece.
I even gets positive reviews from press, USA's edmunds insideline included. It sweeps away all major Indian car of the year awards, including the ICOTY 2010.
Sales settle in 3-3500 level, as much as tatas can produce from pantnager till the new factory comes up. every nano produced finds homes in many corners of the country and the first owners become superstars, getting more eyeballs from onlookers than most hypercars included. The country feels proud.
But bad luck strikes again. About 7-8 nanos catch fire in these periods till today and press not only in India, but globally now begins to question its safety and even question tata motors safety record by saying, "safety need not necessarily come CHEAP."
Negative publicity spreads across the country and tata motors now realize that they can no longer bite off more than they can chew. An investigation is ordered and given all clear after a couple of minor niggles sorted out. IS this negative publicity generated by the global media the second nail in the nano's coffin?
As soon as the new plant goes into operation built in a record 14 months, sales skyrocket to a consistent 8-9000 level for about 3-4 months. Looks like good times are back again for the little wonder.
Then the inevitable happens. News of fire again reverberates around the industry and nano sales start to skid to 5000-6000 odd level, as a result of perception. Third nail's cause?
And then another disaster strikes. The nano gets not one, but two price hikes as high cost of raw materials and rising input costs are proving to be too good to be true. Total hike comes in the rein of 15-20 grand depending upon the model and location.
Tata then announces that the nano is now available off the shelf in many parts of the country, this after 70,000 of the 2,03,000 nanos booked are delivered.
Did Tata face huge booking cancellations?
And then sales drop down to just 3,024 in october.Contrary to the perception about plant capacity constraints or maintenance shutdowns, dealers are having huge stocks of nanos piling ups and some of them now start giving free accessories to move out the car.
Then comes the final nail in the coffin-the graph just drops to 506 in November, down a whopping 85 percent Y-O-Y.
Just a few days back, seeing falling sales, Tata m,otors makes an official statement of some additional design modifications that have been done to make the nano more safer than before. Not billed as a recall, but a goodwill repair.
So, what we need to discuss is the following points:- What led to this overall decline? Any one of the 4-5 causes that I have tried to analyze or something else?
- What we want to do is to identify the root cause of the problem.
- What as the exact cause of the problem?
- What can be our observations; and
- possible solutions that can be emerged from this situational analysis that I have put forward.
- How much good will a diesel nano do to get the car back on track?
So members, do not put anything in haste. Think carefully and then pen down your comments. I will analyze each and every reply very carefully and then put my further comments forward.
Now, before you all start saying this is "just another nano debacle thread", get a gist of the purpose and then put your replies.
The debate is open now, all the best.