Sunday, April 05, 2009

Post 596 : A Mega Flop or a Nano Success


1237931762160 tata-nano-standard


Since I have heard about the Nano (the Tata one, that is), I have never really liked the idea. It is flawed and for various reasons. Here are my few bits.

1. It seems a ridiculous to design a car around a price point. Can you imagine if we started doing that with software (“I will develop whatever I can in 1L, make it behave like what is supposed to be e.g. trading system, it wont be the best trading system, but I am sure it will work”). This hare brained theory assumes there is a price point for everything in the market. That is the most muddle headed assumption in my head….wait, a minute, I stand corrected….there is indeed a price point demand for every item in the market, whether YOU can sustain business at that price point is upto debate (actually its not a debate, the answer is YOU CANNOT).

2. Is Tata Motors connected to the “Sisters of Charity”', I mean is this a business or is this altruism?

3. I firmly disagree with the notion that such a ridiculous business plan can make money.

4. Lets move on to safety. How can the Nano frame be safer than a Mobike (Ratan Tata’s famed example, “I saw a family of 4 on a bike and wanted to give them safety”). This is nutty. You replace a 2 wheeled coffin with a 4 wheeled one.

5. Give me one Tata car which has been a commercial success AT THE RIGHT TIME. Lets rewind a bit. Indica was way ahead in 1999 when it came out with a SMALL BIG car concept. Its reliability and sturdiness was very suspect, right until XETA 2007. They have finally got it right with Quadrajet Vista? Will you buy an Indica Vista today? No way, A-Star, i10 are way ahead in that league.


tata-indica-ev-1 Original Indica

untitled  new Indica Vista
- Example 2 – Safari was a phenomenal aspiration of a  car (I always wanted one when I was growing up). Till 2004 it was un-reliable and expensive, and now that they have a Dicor 2.2 under 13L, will I buy it? Are you Nuts, give me a Scorpio on the lower and Montero 18L on the higher side.

tata-safari-2005 AETV447837_1b
- Example 3 – SUMO a good utility vehicle could have grabbed the Armada market. What did it do? Nothing “Kuch log sumo chalate hain” was their crappy ad. And now in 2008, they launch Sumo Grande for 7L. Give me a Scorpio.

Tata_Sumo Original Sumo

tata-sumo-grande-photo Sumo Grande

6. Mr. Ratan Tata, please fire your brand managers. WhoTF wants a Vista which is still called an Indica, whoTF wants a Grande still called a Sumo?

7. Tata Motors has “call center vehicles, LMV and taxis” in their DNA. Even a Indigo XL lost out in the brand war inspite of a decent platform and a good pricing.



So whats my point with all of this screaming?

1. Nano will sell – will be a hot seller in the first year (just like the Safari and Indica were in their initial years).

2. In about 12 months everyone will realise what a rip off this car. I am sure it will acquire the reputation of a “Coffin” car, a la Maruti Omni Van.

3. By then Renault will come in with a solid offering in that segment and so will others who will see big business in that area. (Heard Suzuki and Skoda are eyeing that segment).

4. Tata will take 7 years to mature Nan0 by when the market will be dead and long gone.



My prediction:

1. Nano is bound to fail (eventually).

2. Tata Motors today (4th April 2009) trades at an EV/EBITDA of 8.61. My bet is the whole market will be re-rated (MOVE significantly up) in 12 months from now, and YET, on 1st May 2009, Tata Motors will trade at an EV/EBITDA of less than 8.61



Call me non-patriotic (yeah for some reason the “nano coffin” is equated with Indianness…holy crap), call me a cynic, call me a rude bunny, a crack jack fuckup….whatever suits….I think I have only 1 question to idiots who will spend 1.8L on a power steering AC Nano

Why will you not buy a 2005 Santro Xing XP, or a Spark DS with all the features and a million times more reliability than a Tata. (I speak from experience, I rode a Santro for almost 5 years, its reliability is legion)? You will get that car for 1.8L or much lesser ….

I rest my case.

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