Detail explanation of Ultra low cost car segments. brief explained with an example of TATA NANO CAR Global Market study and forecast of Ultra low cost car. Its product development and Approach. Challenges and Opportunities of Ultra low cost car segments

1. ULTRA LOW COST
CARS
Presented By
- Chandan Nagaraja

2. What is ULTRA LOW COST
CAR..?
• Ultra low cost car segments costs between
$2,500 to $5,000 (€1,750 to € 3,800) or less than
$5,000.
• It has basic components and needs required by
the car.
• Ultra low cost car is targeted to lower middle
class, whose income ranges between $2,000 to
$5,000.
• India and most of the developing economies is
thickly populated with lower middle class people.

3. Automotive Examples - History
Ford model T in 1908
20 hp
Original Cost = $850
( Equivalent to Today‘s market value =
$20, 700)
VW Beetle in 1956
34 hp
Original Cost = $ 1,995
( Equivalent to Today‘s market value = $
12, 333)
Austin Mini in 1961
24 hp
Original Cost = $ 2,100
( Equivalent to Today‘s market value = $
12,900)

4. World‘s First Ultra Low Cost Car
– Tata Nano
 In 2008, Tata Motors from INDIA launched
NANO car
 World‘s cheapest car
 Cost = 1 lakh Indian Rupees (€1750 , $2,500)
 Stylish, comfortable
 Fuel-efficient engine (23-25 Kmpl), 33hp
 Meets all safety requirements
 Environment-friendly
 Popularly it is hailed as the “People’s Car”

5. An idea can make billion people
Smile.

6. Seeds of the Dreams.
I observed families
riding on two-wheeler
the father driving the
scooter, his young kid
standing in front of
him, his wife seated
behind him holding a
little baby. It led me to
wonder for such a car
which is safe &
affordable to any
Middle class family.
Mr. Ratan Tata
Problem

7. TATA NANO – Dream – Criteria
and Success
 [Dream] - ―It led me to wonder whether one could conceive of
a safe, affordable, all-weather form of transport for such
a family”
 [Criteria] - ―Tata Motors‘ engineers and designers gave their
all for about four years to realize this goal. Today, we indeed
have a People’s Car, which is affordable and yet built to
meet safety requirements and emission norms, to be fuel
efficient and low on emissions‖
 [Success] - ―We are happy to present the People‘s Car to
India and we hope it brings the joy, pride and utility of owning
a car to many families who need personal mobility.‖

8. The ONE lakh car that drives ONE
billion dreams…

9. Why do we need ULCC…?
 According to Statistical data and analysis, most of the indicator points to an
Automotive industries is in recession, especially after 2008 global financial
recession. Automotive leaders should balance between global financial crisis
and future market demand.
 Industrial consolidation and restructure in global market will
accelerate, however it is propelled by the lack of availability of capital and
consumer financing, high fuel costs and low consumer confidence.
 Undoubtedly, a new and improved automotive operating design model will
emerge from this crisis, facilitated by ―New Innovation‖ and ―Low Cost
Solution‖ to serve the demands if a broader market of consumers.
 Perhaps, the launch of Ultra-Low Cost Car segment is the Answer for
current crisis. ULCC marks the beginning of new era in automotive industry
and redefining the competitive landscape for the entire industry.

12. Features
Length 3.1 meters
Width 1.5 meters
Height 1.6 meters
Engine
All-aluminium, Rear Mounted, Rear
Wheel Drive
Capacity 623 cc
Power 33 PS
Fuel Injection Multi Point Fuel Injection (MPFI)
Fuel Type Petrol, Diesel Version will be later
Body Type Sheet Metal
Seating Capacity 04 (Four)
Mileage
20-22 Kmpl (City drive)
26 Kmpl (Highways)
Top Speed 75 K.M
Emission Norms Euro-IV, Bharat Stage-III compliant
Safety Norms Frontal Crash Tested
Versions One Standard and Two Deluxe

13. SWOT Analysis:
• It‘s nearer
competitors Bajaj
Auto are ready to
introduce ‗cars‘ less
than the price of
―NANO‖
• No regular size
luggage room.
• No modern
ABS, ESP
systems
• It can capture the
large market in the
society, i .e.
―Middle class‖.
• Cheapest car in
the World.
• 21% more space
than Mruti800.
STRE
NGTH
OPPO
RTUNI
TIES
THREA
TS
WEAK
NESS

14. The Global Sale Forecast for
Ultra Low Cost Car

15. Perspective Customers in
India

16. Low-cost cars are selling in
advance and emerging
markets

17. Top Ten Customer‘s Pocket Friendly Cars in
the World
NAME OF THE CARS PRICE COUNTRY
1. Tata Nano: 4-door $2,497. India
2. Chery QQ: 4-door hatchback $4,781 China
3. Suzuki Maruti 800: 5-door
hatchback
$4,994 India
4. Geely MR: 5-door $5,500 China
5. Geely HQ SRV: 5-door "tall" estate $5,780 China
6. Chery A-1: 5-door hatchback $7,340 China
7. Tata Indica $8,500 India
8. Hyundai i10: 5-door hatchback $9,096 South Korea
9. Fiat Palio: 5-door hatchback $9,242 Born in Brazil and
sold in Most of Asia
& America
10. Renault/Dacia Logan $9,477 Romania/Turkey/Ira
n/Latin America

18. Vertical view of the Current
market
The expansive potential of this market is commanding the attention of
manufacturers and vendors worldwide, with a number of global players
recently announcing strategies to enter or compete in the sector .
General Motors, which produces the mini-car, Spark, in India, expects to
introduce another low-cost car in 2015.
Hyundai and Renault S.A.–Nissan have plans to produce a car for the low-
cost car market.
Skoda Auto, part of the Volkswagen Group, is investing in product
development and plans to expand capacity in India.
Fiat announced in August that it would market three models in China.
A low price point and razor-thin margins— estimated at around 3% at the
base model levels—will make hard-to-come-by profits easily susceptible to
rising commodity prices, product launch missteps and market economics.

19. Preserve and Protect
or
Participate and Prosper?
• The dynamic and powerful ultra-low-cost car market is forcing manufacturers
and suppliers to decide between two strategies.
• The first is to preserve their brand and market positions and protect them
against new market entrants, current competition and future price pressures.
Established suppliers opting for this stance risk falling into the ―low-cost trap‖
between manufacturers and their new component standards and lower target
prices.
• A new set of low-cost competitors will emerge with the potential to enter
mature markets and capture market share from the domestic
suppliers, forcing existing participants to protect their positions.
• The other choice for manufacturers and suppliers is to participate to capture
share in the fastest growing segment of the industry and prosper by being
leaders in developing the market. We believe first movers will have the
opportunity to capture market share and build consumer loyalty.

20. Then…..,
How to Approach to Ultra
Low Cost Car
Concept…….??

21. Apply a Clean-Sheet
Approach
 Early movers on both the manufacturer and supplier sides have
demonstrated that nothing less than a clean-sheet approach to product
development and manufacturing can produce a vehicle that sells for less
than $3,500. Tata Motors, for example, used this approach to develop the
Nano, the world‘s least expensive automobile, by adhering to four guidelines
.
 Cooperate with suppliers.
 Reduce the number and complexity of parts
 Invent rather than Adapt - Tata Seeks 37 Patent Rights For Nano. The move
is also expected to help Tata Motors to sell the car in markets such as
Africa, Southeast Asia, Eastern Europe and Latin America -
NANOVATION
 Standardize at every stage of the value

22.  The Tata Nano uses plastics and adhesives rather than welding.
 Introducing the car with an artificially low price through govt-subsidies and tax-breaks, or using vertical-
integration, or partially using inexpensive polymers or biodegradable plastics instead of a full metal-body.
 It has no AC, no power steering, no power windows, no power bells and whistles, due to its low weight.
 The car's exterior and interiors were designed at Italy's Institution of Development in Automotive Engineering.
 The Nano's design implements many measures that make its manufacture cheap.
 The Nano's trunk is only accessible from inside the car, as the rear hatch does not open.
 One windscreen wiper instead of the usual pair (also seen earlier on certain Citroen and Mercedes models)
 Three lug nuts on the wheels instead of the usual four and Only one wing mirror.
 Radio or CD player is optional (the idea picked on some basic car models in North America)
 No airbags on any model 624cc rear engine has only 2 cylinders.
 No air conditioning in base model (as on most basic car models in Europe and North America)

23. What makes it so cheap !

24. Traditional Mind-set
• ― Too risky‖
• ― Suppose it fails?‖
• ― Impossible. Never done before‖
• ― I don‘t see how that is possible‖
• ― Somebody must have already tried it.‖
• ― Too hard‖
• ― Ridiculous‖

25. Question the Unquestionable
• First time a two cylinder engine used in a car with single balancer shift.
• Adhesives replacing rivet's.
• Co-creation with vendors and suppliers.
• 100 vendors co-located to plant
• Innovative business model for automobile dealership.
• Look to other industries for ideas:
Seats from helicopter – light, strong, high vibration
Dashboard and fuel lines from scooter

26. ULCC is Driven By Innovation
 Innovative technology
 Innovative process
 Innovative systems
 Innovative delivery methods
 … and more

27. A ULCC on Europe‘s Roads? Probably.
On North America‘s Roads? Probably Not.
Three overarching factors will shape the ultra-low-cost car‘s future in both markets:
 Emission standards
 Safety Regulation.
 Distribution
• An luxury Nano concept
car called the Nano Europa
was shown at the
2009 Geneva Motor Show.
• Tata Motor‘s has decided to
launch in European market by
2015.

28. The Strategy: What Works?
What Doesn‘t?
 Create entrance and growth strategy
 Establish targets and make trade-off
decisions
 Align across functions and collaborate
with suppliers
 Measure of Creativity and Innovation
 Benchmark the competition
 Protect and preserve market positions

29. Final thought….!!!!!!
• One day the dinosaurs died, they died because
they ate too much and occupied too much
space and they were a burden on the planet or
rather prevailing Jurassic era society. Then
came the turn of the winged reptiles. The
winged reptiles died to be replaced by the bird.
• The Ultra Low Cost Car (Tata Nano) is the
future of cars; Will it put an end to the
dinosaurs, the Safaris, the Prada's, the
Scorpio and so on?