- Environmental factors
The government’s approach to reducing vehicle emission have led to set of policies; where the manufacturers of the automobile have to ensure they comply with the population standards, car component quality, safety measures and roadworthiness, aimed at reducing emission in the automotive sector (Bharj et al. 2019). In response to these measures, Tata motors have adopted Exhaust Gas Recirculation (EGR) and energy-efficient systems and use of renewable energy in a bid to curb emissions.
2.1.2 Analysis of Internal competitive position
The company is faced with domestic competition challenges in India. Tata motor’s significant local market segment in India includes passenger and commercial vehicles.
SWOT analysis
The coming up of Nano, the middle-class car was highly anticipated to revolutionize automobiles in India, the customers were eager because of the expected features, cost and efficiency (Bhasin, 2020). However, when the model was released, it was not a big hit as it was expected, and it has lagged to occupy the market despite the features. The company admits the wrong position of the Nano brand, and the initial marketing strategies were poor (Singh and Shalender, 2014). This can be analyzed further through SWOT analysis;-
- Strengths analysis of Tata Nano
The proposed price was itself strength, a significant factor that created impression globally. Also, the arrival of the car in the market was a challenge to Tata motors competitors because of its size, ease of handling the vehicle and the efficient millage attached a status symbol to Tata Nano. The caw was a four-wheeler; this promoted the image of the brand, although the sales were not as anticipated. The company has the capability of producing low price product like Nano (Crawford, 2016). Although Nano did not do well in India, the company can sell the product to other countries where such a product could thrive. Nano product is a significant strength for the company, but it needs improvement to meet the required customer safety and manufacturing standards. This would ensure the future success of the product.
- Weaknesses
The proposed price for Nano was 1lacs which was equivalent to $2,000, but after the launch, the prices range was 20 – 50% more than the intended price which acted as a significant hindrance to customers. The car developed technical problems immediately after the launch with few cases of the vehicle catching fire. This weakened the brand further. Additionally, due to lack proper planning on the sustainability of the innovation, the political pressure forced the company to move its plant to a different site which affected its production Muhamad et al. (2014). Therefore, production delays, inflation, increased cost of material such as rubber and steel, among others and this lead to an increase of Nano’s price.
- Opportunity
While Nano was meant to be a car for middle-class people, the first cars were being purchased by more consumers because of its contingency to drive in metro transportation. The country has a young generation that the company sees as a significant opportunity for Nano model and automobile growth. Tata Nano is a diesel car, thus compared to other models; the car’s millage is highly effective in the country.
- Threat analysis
The price for Nano was very affordable, which lead to many manufacturers start working on alternative models such as Hyundai H800 and Maruti Cervo 600cc Bhasin, (2020). This was a threat to the advanced growth of Nano. Nano cannot be used for highway driving or long-distance because of its low 623 ccs. The car had technical glitches which made most consumers who wanted a cost-effective vehicle to opt for motorcycles, which was a significant threat that Nano faced.
2.2 Related market constraints
Tata Nano set a very high expectation that limited the ability of the business to perfect the model. Flexibility to the market innovation and product strategy is very crucial when developing a product. The business failure to understand what the customer wants, who wants it, how and under what circumstance they will use it, can affect the product reliability.
According to (Tata Motors press release in Many 2019), the company’s weak market segment continues to be a significant constraint that is affecting Tata domestic sales. Its commercial and passenger vehicle business sales dropped by 26%, the cumulate growth of the company (April-May 2019) drop from 107,758 units to 82, 684 units compared to the previous period. The company attributes the weak segmentation to depressed freight rates and underutilization of its trucks. Also, a slowing economy and stagnant industrial output have contributed to a decline in Commercial vehicle sale.
The demand for M & HCV in the domestic market declined in May by 38% at 7,683 units visa vis 12,242 units sold in 2018. I & LCV truck segment sales drop as well, and this is due to e-commerce and discretionary consumption. However, the consumers have accepted the new products introduced, which contributed to a 10% growth.
The company’s exports reported a reduction of the sale in May 2019 of 1,563 units lower by 58% over the previous period. The decline was due to a drop in sale in some countries, high stocks in the SAARC region and among others affected the entire industry volume.
Additionally, according to (Tata Motors press release in September 2017), the company is facing high costs of production supply constraints, which is still struggling to reduce. The company aims are cutting prices in all departments, including lowering its employees.