Nano will not affect the sales of Maruti 800

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The entire global auto industry is looking forward to the commercial launch of our own indigenously developed Micro Mini car – The Tata Nano

Ever since the wheel got invented, it has never stopped even in the hard days whether there was war or petrol hike or for that matter shortage of crude oil. Only cheaper options were used, from bigger automobiles they came to smaller ones, from four wheels to two, car pools used to tide over the hardship and people moved to public transport. Presently we are facing a sort of crisis although not so serious as happened during the world wars and in mid seventies when oil prices sky rocketed. In the last two quarters there has been a substantial increase in the sales of small cars. Since mid-2008, car sales in Europe have dropped drastically; huge pileups have been noticed outside the car manufacturing facilities, abandoned airstrips & cheaper parking lots taken outside city limits to store new cars by dealerships.

We are now heading for another grand entry into the World of Mini cars; the entire global auto industry is looking forward to the commercial launch of our own indigenously developed Micro Mini car – The Tata Nano! The timing of Nano launch couldn’t have been better. Even Nostrodamus could not have predicted this world wide recession & economic meltdown. Ratan Tata’s promise five years back to deliver to the world a car priced at hundred thousand rupees has indeed come true. The much awaited launch of the Nano has been announced for March 23. Though a lot of water has flown under the bridge in these five years and there has been a price escalation of 15-20%, it is now to be seen what the introductory price of Nano is going to be. Commitments made five years ago were based on pricing of raw material and other input costs at that time. How Tata plans to keep his word is something that one has to wait & see. This of course is compounded by the fact that how long would they hold the launch pricing even if they manage to announce the price at one lakh! Tatas have come a long way since they first introduced their passenger cars, almost two decades have passed and a lot of R&D has been done in critical areas of customer comfort, reliability, pricing and features, styling, etc. Collaborations with other automobile giants like Fiat, using well established technologies have allowed Tata to produce cost aggressive, well performing, decently styled vehicles.


There is often a discussion lurking under the shadow of Tata Nano – how will the Nano launch affect our own tried, tested & trusted Maruti 800? Actually speaking they are two different segments now. In fact the arrival of the Nano has virtually split the Mini A Segment further: Maruti 800 and Nano 600. Let me also add here that the Nano is not, I repeat, ‘not’ going to replace the two wheeler as the popular buzz word goes around. Two wheeler owners may have a Nano for weekend and other occasions use where the family has to move together but one definitely cannot afford to use the Nano to office and back in terms of maintenance and fuel economy. As predicted by the manufacturer, this car is going to give a fuel economy of 20 KMPL a consumption that has already been ‘endorsed’ by the ARAI in case of the Suzuki A-Star. Hence, the novelty and popularity of Nano is going to be the price factor and the small size! It’s going to be a popular second car option in the urban middle income group house-holds.

Already a lot of variants for the Nano are being thought of, hybrid, battery operated, diesel operated and any other researched power option. Because of its size & weight, Nano can be imagined with various innovative propulsion systems. This car’s arrival is going to turn around the future of Tata’s passenger car offerings in the domestic & global market. It may well get to be the hottest seller of the past and the next 25 years and is sure going to turnaround the fortunes of Tata! But then didn’t we hear Suzuki, GM and others planning a Nano beater for India? These car manufacturing boys love their toys and all of them, for a change, are going strategic saying ‘Mine is smaller than yours’ – one industry where Size Does Matter!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Must we dread the ‘N’ word?

The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School

The prime concern at this moment for Bernanke, as well as for the US, is to recover from the current recession. For that the financial sector needs to stabilise and the banking sector to normalise its lending. But in the prevailing environment banks are busy saving up for the rainy day (as if it hasn’t already come!). To counter the situation, apart from letting the economy die, the Fed is left with two more alternatives. First, as Paul Donovan, Managing Director, Global Economics, UBS Investment Research told 4Ps B&M, “The Japanese way of stabilising the growth at a sub normal level with a distressed banking system.” And the second option is the Swedish approach of short term nationalisation, which means taking over banks, cleaning them up, and then selling off as soon as possible. While the first one is not at all advisable for obvious reasons, the second option is impractical for the US. As Donovan explains, “The Swedish method is not directly applicable to the US banking system because the US has a large banking system comprising many small banks. It is unlikely that the US will guarantee all creditors of the US banking system as Sweden, which had a few large banks, did. Certainly there are lessons (positive and negative) that can be learned from the Swedish solution. However, each banking crisis has unique causes and requires unique and customised solutions.” Definitely, the US solution has to be unique and customised. It has to be far more punitive.

It’s true that the US cannot takeover all banks, so it must become harsh. Let a few of them close down, and at the same time pick up a few large ones, revamp and make them torchbearers in its fight against recession. This process is not at all alien to the US as Mark Vitner, senior economist, Wachovia Corporation, says, “We have a process that allows the federal government to take over and temporarily run financial institutions. This was done most recently with IndyMac Bank in California.” Bernanke must immediately take a cue from this and make sure that things are back on track as soon as possible; does not matter how.

With ever increasing examples of nationalised banks beating their private counterparts, we must stop throwing good money after bad money, and be bold enough to bolt those responsible for the bad money (losses). So there! If Bernanke fails to do it right this time, obviously to prove his ‘strong supervisory oversight’, who knows which way the cookie will crumble next!

The prime concern at this moment for Bernanke, as well as for the US, is to recover from the current recession. For that the financial sector needs to stabilise and the banking sector to normalise its lending. But in the prevailing environment banks are busy saving up for the rainy day (as if it hasn’t already come!). To counter the situation, apart from letting the economy die, the Fed is left with two more alternatives. First, as Paul Donovan, Managing Director, Global Economics, UBS Investment Research told 4Ps B&M, “The Japanese way of stabilising the growth at a sub normal level with a distressed banking system.” And the second option is the Swedish approach of short term nationalisation, which means taking over banks, cleaning them up, and then selling off as soon as possible. While the first one is not at all advisable for obvious reasons, the second option is impractical for the US. As Donovan explains, “The Swedish method is not directly applicable to the US banking system because the US has a large banking system comprising many small banks. It is unlikely that the US will guarantee all creditors of the US banking system as Sweden, which had a few large banks, did. Certainly there are lessons (positive and negative) that can be learned from the Swedish solution. However, each banking crisis has unique causes and requires unique and customised solutions.” Definitely, the US solution has to be unique and customised. It has to be far more punitive.

It’s true that the US cannot takeover all banks, so it must become harsh. Let a few of them close down, and at the same time pick up a few large ones, revamp and make them torchbearers in its fight against recession. This process is not at all alien to the US as Mark Vitner, senior economist, Wachovia Corporation, says, “We have a process that allows the federal government to take over and temporarily run financial institutions. This was done most recently with IndyMac Bank in California.” Bernanke must immediately take a cue from this and make sure that things are back on track as soon as possible; does not matter how.

With ever increasing examples of nationalised banks beating their private counterparts, we must stop throwing good money after bad money, and be bold enough to bolt those responsible for the bad money (losses). So there! If Bernanke fails to do it right this time, obviously to prove his ‘strong supervisory oversight’, who knows which way the cookie will crumble next!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
Detail of all IIPM branches
1500-plus IIPM students placed across the country with 44 bagging international offers
IIPM set to beat economic slowdown
IIPM Admission Detail
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
IIPM - Admission Procedure
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION