ULTRA LOW COST CARS

Presented By- Chandan Nagaraja

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.

Automotive Examples - History

Ford model T in 1908 20 hpOriginal Cost = $850 ( Equivalent to Today’s market value = $20, 700)

VW Beetle in 195634 hpOriginal Cost = $ 1,995 ( Equivalent to Today’s market value = $ 12, 333)

Austin Mini in 196124 hpOriginal Cost = $ 2,100( Equivalent to Today’s market value = $ 12,900)

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”

An idea can make billion people Smile.

Seeds of the Dreams.

I observed familiesriding on two-wheelerthe father driving thescooter, his young kidstanding in front ofhim, his wife seatedbehind him holding alittle baby. It led me towonder for such a carwhich is safe &affordable to anyMiddle class family.

Mr. Ratan Tata

Problem

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.”

The ONE lakh car that drives ONE billion dreams…

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.

FeaturesLength 3.1 metersWidth 1.5 metersHeight 1.6 meters

EngineAll-aluminium, Rear Mounted, Rear Wheel Drive

Capacity 623 ccPower 33 PSFuel Injection Multi Point Fuel Injection (MPFI)Fuel Type Petrol, Diesel Version will be laterBody Type Sheet MetalSeating Capacity 04 (Four)

Mileage20-22 Kmpl (City drive)26 Kmpl (Highways)

Top Speed 75 K.MEmission Norms Euro-IV, Bharat Stage-III compliantSafety Norms Frontal Crash TestedVersions One Standard and Two Deluxe

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.

STRENGTH

OPPORTUNITIES

THREATS

WEAKNESS

The Global Sale Forecast for Ultra Low Cost Car

Perspective Customers in India

Low-cost cars are selling in advance and emerging markets

Top Ten Customer’s Pocket Friendly Cars in the World

NAME OF THE CARS PRICE COUNTRY1. Tata Nano: 4-door $2,497.  India2. Chery QQ: 4-door hatchback $4,781 China3. Suzuki Maruti 800: 5-door

hatchback$4,994 India

4. Geely MR: 5-door $5,500 China5. Geely HQ SRV: 5-door "tall"

estate$5,780 China

6. Chery A-1: 5-door hatchback  $7,340 China7. Tata Indica $8,500 India8. 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/Iran/Latin America

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.

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.

Then…..,

How to Approach to Ultra Low Cost Car Concept…….??

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

What makes Nano Car …?? 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) 

Nano-Cost..!!

What makes it so cheap !

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”

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

ULCC is Driven By InnovationInnovative technology

Innovative process

Innovative systems

Innovative delivery methods

… and more

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.

The Strategy: What Works?What Doesn’t?Create entrance and growth

strategyEstablish targets and make

trade-off decisionsAlign across functions and

collaborate with suppliersMeasure of Creativity and

InnovationBenchmark the competitionProtect and preserve market

positions

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?  

THANK

YOU