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Will Tata's Nano will be successful?
Will Tata's Nano will be successful?
The competitive edge of Tata Nano over its competitors is:
- Low Cost, Employed Light weight steel for its body and aluminum engine cover, Single Windshield Wiper, No hatchback, Engine at rear, Digital Fuel Indicator and Tubeless Tyres
- More spacious among the low cost small cars i.e. Maruti Suzuki 800, one of its main competitor, 20% less space compared to Tata’s Nano
- Less pollution.
- The Indicating instruments like Fuel gauge, speedometer are mounted in the centre and not on the dashboard, reduces costs in shifting the steering wheel from left to right or vice versa
- Almost 97% locally sourced, whereas its competitors depends more on imported components.
- Worked in collaboration with suppliers. Collective thinking and out-of-box approach.
- Cheap labor costs and flexibility, high level of available management and engineering skills have maintained the competitiveness against the global players.
Pressures:
- First mover advantages for two years may prove to be successful, but rising commodity prices could be disruptive to its growth. Ex; Rubber and steel could play havoc with the car’s pricing.
- Due to high demand and less availability of oil resources will increase the fuel cost which may lead the consumer to switch to Bio-fuels or electric cars.
- New entrant’s entry Automakers like Hyundai, Bajaj are also planning small car offerings.
- China will be a major challenge to Nano by manufacturing cars even lesser or equal to Nano’s price. Unlike India, which has struggled with the rising Indian Rupee against the dollar in the past two years, china’s artificially suppressed currency will make export markets easier to tap.
- Maintenance costs are still unknown, For Maruti Suzuki 800; maintenance costs are 400-500 per month which are affordable. To sustain the competition, costs must be less for Nano
- Government regulation on excise duties may prove costlier. For eg: In the Mid 1990’s pune-based automaker, Kinetic developed 700 CC low cost car, but the plan was dropped because government revised excise regulation for all automobiles above 650 must pay same excise, which incurs huge costs.
- Low resale value. Maruti 800 has got a good resale value because of its massive success.
- Crash safety, Yet Nano has passed the safety standards. We are unsure about its safety.
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