Friday, June 19, 2015

Un-parking of Tata Nano Car: From Parking Spaces to Electric Mobility!

Every time one travels in the crowded traffic on the Indian roads one cannot but notice the sight of small families (husband and wife with their two children) navigating dangerously. Rattan Tata’s vision of providing such families a safe, comfortable and economical transportation mode in terms of Tata Nano car has unfortunately translated itself into a muted reality. The failure of Tata Nano to fulfil the dream is seen by the company as a technical and marketing issue. As a result there have been sincere and consistent efforts to upgrade the car and also reposition it as a vehicle for the young Generation Next. These moves have also not set the sales graph soaring. The changes made indeed are significant given the fact that Nano with its micro-compact form factor is already an engineering marvel.

The new 2015 Nano GenX car comes with an expanded product line up, covering three manual and two automated transmission variants. Apart from cosmetic changes like improved bumpers and smoked headlamps, the range comes with two key enhancements: automated manual transmission (with enhanced fuel economy) and hatchback opening for accessible boot space. At a higher ex-showroom price of Rs 215,000 to Rs 300,000, Nano car is now positioned as a car for the well-to-do young people, a major departure from the original positioning as the world’s lowest priced small car (at Rs 100,000) for the needy. Clearly, the repositioning of Nano as a peppy car for the college going students and young executives is underway. That leaves the fans of Nano’s original concept as a unique affordable car for the bottom of the income pyramid quite disappointed.


Indian transportation scenario is woefully space constrained. India’s population density per kilometre of metalled road is one of the highest in the world even as the per capita vehicle ownership is one of the lowest in the world (200 million registered motor vehicles, 5 million kilometre roads, and 1.2 billion population). The car density per kilometre of metalled roads at 40,000 (approximately) is also one of the highest. To compound the misery, annually 22 million vehicles are being manufactured for use in Indian roads, aggravating the problem beyond imagination. Most metros and upcoming cities suffer from hours of traffic gridlocks. Habitats are built with inadequate parking space. Even modern day offices have poor parking space. A study of office development shows that for every 100 employees in an office only around 10 car parking slots and around 40 two wheeler parking slots are likely to be available. The situation in shopping districts is no better; a 100 store shopping mall (with a multiplex additionally thrown in) or a hi-street of retail and pavement shopping, each of which sees 5000 shoppers daily has no more than 300 car parking slots and strangely just the same number of two wheeler parking slots!

The fact that approximately 77 percent of the output of 22 million units of automobiles in India is contributed by two wheelers indicates the tremendous need for mobility and also the attractive potential for switch to passenger car mode (right now, 15 percent of the output at 3 million units is in passenger car segment).  The Indian automobile industry is the sixth largest in the world and is poised to grow to be the third largest in the world by 2020. The relentless march of automobile congestion on Indian roads is likely to only intensify in future. While part of this may be mitigated by greater expansion in rural markets (where practically no roads exist) the inevitability of an overall space constrained transportation scenario in a growth oriented India is easy to imagine. The challenge for Tata Motors is whether this represents an opportunity but only with reference to other larger cars and countless two wheelers on the roads. No extent of technical upgradation or market repositioning would help Nano achieve its full potential for two reasons: (a) it is optimally developed already for the purpose and (b) the optionality of Nano is parking space related and not specification related.

Logistics challenge

As mentioned earlier, Nano has been innovatively designed vis-à-vis contemporary small cars and appropriately positioned in the huge potential market space. The challenge in driving up Nano sales to its full potential is neither a product nor market challenge, therefore. It is simply a logistics challenge that is two fold: (a) identifying target users who have adequate parking space but need to be weaned to Nano concept and (b) reaching out to natural Nano customers and finding a parking space for them. This strategy has to be city and habitat specific. If Tata Motors is serious about realizing the full potential of Nano nothing short of a user-parking census would be required. Depending on the resources the company is willing to commit, the project could be taken up as a regional project or a national project.

In this Nano paradigm, Tata Motors may find collaborative stakeholders who may seem unlikely collaborators at the first go. Real estate developers are the first stakeholder group. Tata Motors as an entity, and Tata Group as a whole, may carry out some introspection in this regard. Tata is a major player in the real estate sector covering both luxury and affordable home sectors (the latter with Tata Value Homes). There is no evidence at all that Tata Motors has any coordinated strategy to link up with Tata Value Homes whose customers are also likely to be Nano customers. Similarly, coordination with high-rise developers and gated community developers as well as urban planners in each city would develop pathways to identify customer groups who would have usage overlaps.  It is necessary for Tata Motors to deploy such logistics analytics to map out the workable market.

Value propositions

Once the seriously inclined target customer pools are identified, the next challenge would be to develop value propositions that would make them the buyers of Nano cars. While the high fuel economy of 26 kmpl is, in itself, a major value proposition, more relevant and customised value propositions would be needed. Tata Motors may tie up with Tata Value Homes to offer Nano cars instead of cash discounts. With other developers more arm’s length promotional deals can be considered. There could be other options like reducing lifecycle ownership through subsidized sales, mobile dealer and servicing units, especially near target communities, bundled offers with other cars and assured buybacks. Nano may also be positioned as a call-taxi, specially customized for lady drivers and lady customers with GPS tracking and other safety features.

Tata Nano is one of the most complex consummate product-market challenges ever borne. An elegant design and expansive market ought to have made for perpetual value. On the other hand, the product and market failed to discover even the basic value. Nano’s issue and the discussion in this blog post on rediscovering the potential point to an immutable but underexploited law of marketing that some products are not just products but are fundamental concepts. Xerox copying, Kodak film and Sony Walkman of yesteryears and Apple iPad, iPhone and Watch of current times are such concepts. Nano car is also nothing less than that. It is unfortunate that its introduction as any other car erased the value of the fundamentally differentiated concept of what Nano would have been. It is not too late, however.

Electric mobility

Nano’s future does not merely lie in rediscovering its potential as discussed herein. It would lie in taking it to the next logical technological horizon, which is its transformation into an electric car. Nano, in terms of its lightweight and cute-looking design is an ideal platform for conversion into an electric car. Nano Electric would be an ideal concept in terms of environmental sensitivity and lifestyle complementarity. The stakeholders discussed in this blog post would be more than delighted to tie up with Tata Motors to provide exclusive charging points and parking spaces to Tata Nano. Even the urban planners and city space developers would be happy to provide exclusive and preferential parking lots in public spaces for Nano Electric.

Tata Motors could perch Nano motors as an electric self-driving car in this quest for newer technological horizons. Tata should forge a multi-entity collaboration with firms committed to clean transportation such as Google and Tesla to take Nano to the next higher level. Philosophically, some products need not be products of individual firms adding numbers to their annual income statements. They have an amazing potential to evolve as global heritage products, transforming the way certain conventional activities are performed. Tata Motors can continue to treat Nano as a unique product in its large portfolio or release it for a futuristic global evolution. Nano could be a perfect example of a product concept innovated in India, designed, developed and manufactured in India and scaled up and transformed for an astounding global sweep!

Posted by Dr CB Rao on June 20, 2015       

1 comment:

Manjot kaur said...

I would like to thank you for sharing this great information with us. I am really glad to learn about this because it helps me to increase my knowledge.

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