The Tata Nano Project - Making of the World's Cheapest Car

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Case Details:

Case Code : OPER078
Case Length : 16 Pages
Period : 2003-2009
Organization : Tata Motors Ltd.
Pub Date : 2009
Teaching Note :Not Available
Countries : India
Industry : Automobiles

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The Nano shows that a new world order is possible in the auto industry. It shows a glimpse of what's to come."¹

- Vikas Sehgal, Vice-President at Booz & Company², in March 2009.

"This is a big achievement but the auto market has been changing over the years anyway. To sustain this requires production volumes, great after-sales and product-acceptance."³

- Rakesh Batra, Partner, Ernst & Young⁴, in March 2009.

The People's Car

On April 25, 2009, bookings closed for the much-awaited Tata Nano, the world's cheapest car, made by India-based Tata Motors Limited (Tata Motors). The bookings began on April 09, 2009 and the car received an overwhelming response from the Indian consumers. The company received a total of 203,000 bookings for the car.

Tata Motors, the largest automobile company in India in terms of revenues, launched Nano, commercially on March 30, 2009 (Refer to Exhibit I for a visual on Nano). The car with an ex-factory price⁵ tag of Rs.100,000⁶ generated enormous interest among the public as well as industry experts.

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1] Jessie Scanlon, "What Can Tata's Nano Teach Detroit?" http://www.businessweek.com, March 18, 2009.
2] Booz Allen Hamilton Inc., founded in 1914, was a leading global management consulting firm. In mid 2008, it separated its US government and global commercial businesses, and sold a majority stake in the US government consulting business to the Carlyle Group for US$ 2.54 billion. The US government consulting business would retain the name Booz Allen Hamilton and the commercial and international businesses would be operated as Booz & Company. (Source: http://www.booz.com)
3] "'Will the Nano Change India's Auto Industry'," http://business.rediff.com, March 25, 2009.
4] Ernst & Young was one of the largest professional services firms in the world. It was founded in 1989. (Source: http://en.wikipedia.org)
5] Ex-factory price of a car is the price at which a car manufacturer sells the car to the dealer, Ex-showroom price is the price at which a dealer sells a car to the consumer and it also includes value added tax. On road price of the car is the price at which the consumer buys the car which includes registration charges, insurance, and road tax.
6] As of April 30, 2009, US$ 1 = INR 49.9.

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