Strategy on Tata Motors

?The purchase of the Jaguar and Land Rover brands catapulted Tata into a different league, while also expanding its global footprint dramatically. Jaguar and Land Rover are highly sophisticated vehicles, well-engineered and superbly designed, selling to the upper middle-class motorists around the world. While Tata Motors has been running its UK subsidiary at an arm ‘s length, it could eventually benefit from its engineering, design and marketing expertise. However, the benefits have not been yet spread to India, and Tata’s range still relies on its pre-JLR cars.

Prime among these is the world fs cheapest four-wheeler, the Nano urban subcompact. It was originally intended to sell for Rs1 lakh (Rs100,000), which at the time was equal to around US$2,000. The company had ambitious plans for the Nano, including exporting it to Western Europe and North America. In the event, the Nano ‘s price had to be increased, and it now starts at Rs1. 45 lakh with better-equipped and more sophisticated models running up to twice that amount.

Given the depreciation of the rupee over the past 18 months, the cheapest Nano can still be purchased for under US$2,400. At the time, it seemed that cheap vehicles were what India and other developing markets wanted. Some competitors scrambled to emulate the Nano, while prices of second-hand vehicles plunged. However, the strategy now seems to be a mistake. The car is still far more expensive than a motorcycle or a moped, while those who can afford a car are highly image-conscious. They don ‘t want to be seen in a car that is known to be the world ‘s cheapest – and looks the part.

This problem has become more acute as India’s car market has entered a period of stagnation, pushing down sales. So Tata is fine-tuning its Nano strategy. The new Nano will be more elegant, will have more desirable features and add-ons and will be given a higher price tag. Tata is planning to market it to a different group of motorists, including young urban professionals. A new group of highly educated, successful twenty-something has emerged in Indian cities, and they may find the Nano an attractive first vehicle.