What will the sales goal for the Nano you recommend?
Ratan Tata wanted every household to have a car which was affordable and at the same time safe and comfortable. Nano was the perfect solution implemented by Tata Motors Ltd, but their projection of sales during the initial release of the car to the general public was a bit off.
Initially, they projected to sell only 50000 which would be produced in their Pantnagar facility and later on planned to sell about a million (10 lakhs) annually with the help of the three plants built in Singur. But as shown in exhibit 2 of the case, this projection was not met because as on June 2011, TML procured only 16.45% of the market share in passenger vehicle segment with Maruti Suzuki leading the list with 46.07%.
It is clearly given in the case that the automobile industry had a growth rate of 17% annually. In light of this information, by 2011 the total demand for passenger vehicles should’ve been approximately 2944714 (29 lakhs) from the 1838593 (18 lakhs) in the year 2008-2009. And according to exhibit 2, TML had a share of 16.45% of 2944714 which amounts to 484405(4.8Lakhs) and Maruti’s share was 46.07% of 2944714 which is 1356630(13.5Lakhs).
Company Sales 2010 Sales 2011
Tata Motors 1159512.8 1356630
Maruti Suzuki 414021.83 484405.54
Total sales in Passenger Car Segment 2516850 2944714.5
TML’s projection of sales was indeed the right one to pursue but according to the above calculations, it seems they were unable to achieve it due to various other reasons which maybe competition from two-wheelers or the general public preferring cars of Maruti Suzuki or maybe they were unable to build the 3 manufacturing facilities in Singur on time to enable them to achieve their targets.