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Case Title:

People’s Car” Nano: Can it Combat the Future Cost Challenges?

Publication Year : 2010

Authors: Chaudhuri S, Nath S

Industry: Automobiles

Region:India

Case Code: COM0258IRC

Teaching Note:  Not Available

Structured Assignment:  Available

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Abstract:
The launch of the Nano, a small 623cc car developed by Tata on 10 January 2008, created unprecedented levels of excitement in the Indian car industry. Sceptics had long doubted whether a car priced at 1 Iakh rupees was possible. As Ratan Tata Head of the Tata Group drove the Nano into the auto-expo, India's largest car show, these doubts seemed to have been laid to rest. Tata maintained this over the public address system to the large crowds which had assembled for the launch, with the announcement 'A promise is a promise.' However, the doubt remained whether the car could break even at this price? Could the Nano be offered commercially at a price of 1 Iakh rupees? Or would it be an 'introductory' price that would be hiked almost immediately after the launch?

Pedagogical Objectives:

  • To a break-even analysis of 'Nano Project'.
  • To financial viability of the related parties.
  • To cost management strategies adopted by Tata Motors.

Keywords : Cost erosion; Singur; Land acquisition; Displaced poor; Agriculture; Compensation package; Capital intensive; Automobile; Low cost car; First mover advantage; Small car; Ratan Tata; Auto-expo 2008; Geneva auto-expo; Ravi Kant; Maruti-Suzuki; Bazaz

Contents : 
Tata Motors – Resurgence in the automobile industry
Tata Nano – The People’s Car
Concessions Bonanza
Nano - Costing or Rewarding for Tata Motors?
Financial Statistics of Tata Motors over the years
A comparision between different Models of Passenger Cars

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