Tata Motors has been in news for quite a while for launch of its Nano car touted as world’s cheapest car. Costing at a base price of about $2000 (Two thousand), Nano received unprecedented interest from all over the world. The highest model costs around $3500 and is equipped with features like power window, power steering, air conditioner, fog lamp etc.

Booking for Nano opened last month for first 100,000 cars, which will be delivered by December 2010. Recently, numbers of bookings were made public. It revealed that more than 200,000 cars have been booked i.e. double the planned number of cars in first phase. Lottery system will be used to choose the first hundred thousand lucky buyers!

Initially, the car will be available only in India. Later on, it will be made available in Europe and U.S. in phased manner after satisfying their regulatory requirements.

It has been a remarkable journey so far with such an engineering marvel at sight. No doubt, it was a tremendous challenge for the engineers and all other people working on the project to keep the cost down without compromising on the quality of the car.

The Company also kept its marketing cost low by intelligent moves. It extensively used the internet for the same.

There were some firsts associated with the word’s cheapest car. It is first time forms for booking has been sold for a price (Rs 300 equivalent to $6 at current forex rates). Company sold over 600 000 forms garnering $ 3.6 million from sale of forms alone.
It is first time that over 80 percent of the cost was to be deposited as booking amount. This not only ensured that cash starved company will get much needed life but also kept grey market at bay. Company also stipulated that a person cannot book more that one car in his name.
Interestingly, company received so many booking for Nano without offering any test drive!

It is important to note that Nano was a dream project of Ratan Tata, eminent industrialist and chairman of Tata group. His vision was to provide affordable and safe mode of transport to millions of people who can’t afford the car.
The execution of dream gels with bottom of the pyramid theory of  C.K. Prahalad where business tries to satisfy the need of lower middle class people at a price they can afford and earn money through economy of scale.

It is said that on its base model, company it hardly making any money. But it has generated a great interest and with economy of scales it has the potential to become a money spinner !

Tata motors, which is one of the leading firm of India’s most respected business group, has been struggling with its finances since its acquisition of Jaguar and Land Rover. Company has received about $500 million as the booking amount for 200,000 cars. It should give the company some breathing space as it is preparing to repay the bridge loan taken for financing Jaguar and Land Rover acquisition.
In my last article  (www.bloggernews.net/119797) I mentioned about how Tata group is struggling to overcome the current recession which made its global acquisitions look not so intelligent in the hind sight

It is hoped that the success of its new project(read Nano) with pull Tata Motors out of red !

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