Kollam, , India
Financial Management
0 टिप्पणी करें | 18 लोगो ने देखा है | 27 जनवरी 14  | Sidhartha Sankar Pillai
The Car - El Nano
It had all the features to call it a fairy tale. The narrator of the tale being the giant industrialist and the Tata Group Chairman Mr. Ratan Tata and the curious listeners, the international media as well as the industrialists. It blowed scintillating music to the ears of the waiting millions of the Indian middle class. The 623cc, 33bhp petrol engine with a mileage of 20 km per litre set a new promise to the Indian as well as global car manufacturers. The Indian automobile market is the varied mix of affluent and middle class consumers. At the middle strata of the society the opportunity to reap rich benefits lies hidden which remains yet to be explored which can only be solved by offering affordable and cheaper optionskeeping socio-economic benefits in mind. The industrialist of the middle-class, as he is aptly named by millions, the 70 year old tycoon Mr. Tata perceived the need of the hour to contribute to the equity by bridging the distance between the affluent and the middle class Indian on the question of possessing a commodity often considered to be a luxury- a four wheeler car. The industrialist of the million he is, deserves the applause and cheers for achieving the noble feat of turning the dreams of millions into a reality. The brand new Rs1 lakhs Nano which is slated to hit the domestic market by the end of the current year targets primarily the Rs3 lakh-4 lakh income group which largely comprise of two wheeler users. By the passing of time, more and more automobile majors are likely to enter the fray of rolling out cheaper cars into the market since it is realised that the fortune of making profit lies at the bottom of the pyramid. With semi-urban cities like Nagpur and Madurai which form a significant portion of the target car market growing at a steady pace to reach the heights of prosperity, the prospects of motors industry reaching a boom in another 10 years is becoming a reality. The cost engineering which made the low cost car possiblemight be a matter of interest for those who contemplate an idea of making a mark and grabbing a prominent place in the market. Given the affordability it offers , the market size is set at a higher level and the inelastic demand for the vehicle is expected to be highlyconsistent. A partial cannibalisation of the product is also on the cards although the market analysts have negatived such a possibility. The primary woes which nag the success of the project from external analysis are the traffic conjestion issue and the safety standards it ensures. The elegant Nano meets the safety standards, according to Mr. Tata. Moreover he asserted the fact that it meets all current legislative emission norms and shall have to be upgraded to the EuroIV standards. The traffic congestion can be adressed only by formulating and implementing the safer and wider road projects and ensuring better infrastructure. The cheaper car segment brings about a significant alteration in the allied sectors too. The leasing finance, auto finance institutions, motor parts and accessories industry which are directly supplying to the needs of the automobile segment shall find the customer base expanding when the demand for the cars touch the roofs. The lucrative financing options might lure the customers towards realising theirwish to possess a four wheeler. The spare parts manufacturing sector might initiate innovative research and development process to bring down the cost structure and thereby revising the pricing strategies and sustain in the market. The changes are imminent too in the indirect taxation comprising of VAT and the excise duty. Small car manufacturers have always been enjoying a lower excise duty than the rest of the industry. For instance, Maruthi800, till recently used to be branded as a small and cheaper passenger car enjoyed an excise duty of 16 percent while the industry standard was 24 percent. The tax sops in the sector may prompt the manufacturers to analyse the cost-cutting strategies.

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