activity based costing

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Page 1: activity based costing

DESIGN FOR COST

A case study on TATA NANoPresented byVikas MinhasVikas Minhas

DESIGN FOR “COST” TATA NANO

TATA “Nano”

ABOUT: TATA MOTORS

TATA MOTORS LTD headquartered in Mumbai, India is Part of theTATA Group.Tata Motors has a consolidated revenue of USD 16 billionTata Motors has a consolidated revenue of USD 16 billionTATA motors was established in 1945, when the company beganmanufacturing locomotives and manufactured its firstcommercial vehicle in 1954 in a collaboration with Daimler-BenzAG of Germany. This collaboration ended in 1969.Tata Motors has auto manufacturing and assembly plants inJamshedpur, Pant Nagar, Lucknow, Ahmadabad and Pune inIndia as well as in India as well as in Argentina South Africa andIndia as well as in India, as well as in Argentina, South Africa andThailand.In 2004, TATA bought DAEWOO’s Truck manufacturing unit andbecame TATA DEAWOO Commercial Vehicle, S. Korea,In March 2008, TATA MOTORS acquired BRITISH Brands Jaguarand Land Rover (JLR) business in UK which also includes theDaimler and Lanchester brands.

SEARCH FOR MARKET OPPORTUNITIES

To meet the customer’s requirement of middle class people,TATA found a big opportunity to launch a small and cheap carou d a b g oppo tu ty to au c a s a a d c eap cawhich can house 4 people.As per a rough estimate every home in India has a minimum 1motorbike which costs around 50,000 INR equaling to, q gUSD1097.00, and most of families have 2-3 motorbikes.This mean an average middle class family has around 2motorbikes whose combined cost = 100 000 INR ie USDmotorbikes whose combined cost 100,000 INR ie USD2194.00From this projected cost TATA Motors stared reverse engineeringt d l ld’ h t hi h ti f t dto develop world’s cheapest car which satisfy customer need as

Page 2: activity based costing

MARKET OPPORTUNITIES AND CUSTOMER NEEDS

TATA geared up to satisfy the need of a common person requirement to have a cheap, simple, reliable and fuel efficient “people’s car”.TATA bench marked its competitor as Maruti 800, most popular car in Indian market.Indian market.Maruti 800, which cost around Rs 184,641 ($ 4,059.56 U.S.) base model without power steering and Air Conditioning .N TATA MOTORS h i t t f P i th t b l Now TATA MOTORS were having a target of Price that was below Maruti 800 i.e. less than $4,059.56 USD.TATA realized if they can manufacture a car under this price tag and can launch as soon as possible they can capture the small car market .

IDENTIFYING CUSTOMER’S NEEDSIDENTIFYING CUSTOMER S NEEDS

TATA realized that people need a car for daily use in a radius of 30 miles, which should be fuel efficient, compact to park and reliable.By bench marking Maruti 800, TATA figured out that the engine of new car should not be bigger than 800 cc.new car should not be bigger than 800 cc.Fuel efficiency should be more than 21 KMPL.Sitting capacity of 4 personsBoot space / luggage space meeting requirements of 4 people.No need of power steering.Air-conditioning / heating not an option in base modelAir conditioning / heating not an option in base model.Manual windows in base model.Air bag not a part of base model.

CONCEPT GENERATION AND SUB-SYSTEMSCONCEPT GENERATION AND SUB SYSTEMS

TATA divided the whole car design in sub systems

Its Engine, fuel injection pump brake system, Value Motronic ECU is designed by BOSCH in Germany.

Cl t h B i g b T iClutch Bearings by Texspin.

Gasoline fuel supply system, fuel level sensor by continental AG.

Inner structural panels by CaparoInner structural panels by Caparo.

Static sealing systems (Weather Strips) by HSI Auto.

Instrument cluster by Delphi.

Windshield wiper system (single motor and arm) by Denso

Clutch sets by Ceekay Daiken / Valeo

CONCEPT GENERATION AND SUB-SYSTEMSCONCEPT GENERATION AND SUB SYSTEMS

Engine mounts by Vibracoustics.Air induction system by VisteonRear-wheel bearing by FAG Kugelfischer.Rear-view mirrors, interior mirrors, manual and CVT shifters, washer system by FiscosaFiscosa.Engine sealing by Freudenberg.Drive shafts by GKN.Shifting elements by INAShifting elements by INADeltar Outside and inside door handles by ITWSeating by Johnson ControlCamshafts spin-on oil filters fuel filters and air cleaners by MahleCamshafts, spin on oil filters, fuel filters and air cleaners by Mahle.Glass by Saint-GobainBrake system by TRW

Page 3: activity based costing

FINAL SPECIFICATIONSFINAL SPECIFICATIONS

Engine: 2 Cylinder Petrol engine, all Aluminum (624 cc)Power generated: 33 Hp @ 5250 RPMAcceleration: 0-60 kmh or 37 mph in 8 seconds.Maximum speed: 105 km/h or 65 mphMaximum speed: 105 km/h or 65 mphTransmission: 4-speed manual with power drive in 4th gear.Wheel base: 2,230 mmL h 3 099Length: 3,099 mmWidth: 1,459 mmHeight: 1,652 mmHeight: 1,652 mmKerb weight: 600 kg (1,300 lbs)Tyre: 12’’ tubeless

COST CUTTING FEATURESCOST CUTTING FEATURES

Rear Engine which provide 20% more space in cabin in constrainwheel base dimensions.ee base d e s o sTATA NANO’s boot is fixed, means rear seat should be folded toaccess boot.No power steeringNo power steeringSingle windscreen wiper.Base model is equipped with 3 Lug NutsM ll d id i dManually operated side windows.A/C and Heating not part of base model.Air bags not a part of base model.Use of Plastic and Glue where ever applicable instead of weldingsteel.

RESULTRESULT

World’s Cheapest Car, successfully ridding on World s Cheapest Car, successfully ridding on roads.Passed British Safety Crash test normsPassed British Safety Crash test norms.

TEST DRIVE : REVIEWSTEST DRIVE : REVIEWS

http://www.youtube.com/watch?v=GDVufUfaxlhttp://www.youtube.com/watch?v GDVufUfaxlAhttp://www youtube com/watch?v=xr19m8tRZhttp://www.youtube.com/watch?v=xr19m8tRZ4g&feature=related

Page 4: activity based costing

ANY QUESTIONS ANY QUESTIONS

?? THANK YOU

REFERENCES :

TATA MOTORS websiteTATA MOTORS websiteWikipediaY t bYoutubeZigWheels Auto magazine