Saturday, August 25, 2007

Jaguar & Land Rover in Rs 1 lakh

Whats the Tata strategy?

One on end Tata is pushing for the highest end of Jaguar and Land Rover while on the another is the Tata's "bottom of the pyramid" much hyped Rs 1 Lakh car. Is Tata spreading itself too thin or there is some deliberate thought behind? Lets think about it...

1 Lakh car is primarily for India and other India like emerging economies. Its more about the scale economics and knock down costs by fully redesigning and probably redefining what we know now as a car. The whole supply chain has to improve efficiency by order of magnitudes if the output has to be a car. Also technologically the fuel efficiency of this cars has to be improved by leaps and bounds such that it is not just a cheap car like Mauti 800 (even cheaper) but is overall a "bottom of the pyramid" car with lower total monthly cost of ownership. It will need to have fuel efficiencies closer to a two wheeler to compete in the market where at the lower side two wheelers owners look for flexibility and costs while at the higher side maruti 800 owners look for convenience and also the cost. If Tata has to sell its cars then it has to marry the two segments. Put together a car which is low cost but also offer convenience and flexibility. It should not be a car competing against a 3 yr old Maruti 800 available in second hand market for prices closer to Rs 1 lakh. No fun there!

So do Mr. Tata have the technology for a car with fuel efficiencies more than 40 KM per liter?

If he does not... I doubt the success of 1 Lakh car.
If he do.. then I believe we should long tata motors stock as not only 1 lakh car but also the Land Rovers and the Jaguars are going to do very well!

Why Rover and Jaguar? The biggest problem with these money loosing highly aspirational brands is the "gas guzzler" nature embedded deep in the very design of these 'cars'. If the 1 lakh car fuel technology can be applied here.. then we have at our hands a premium car which is as fuel efficient as a normal car. It is then the aspiration brand value in these brands will kick in and Tata can have winning proposition at hand.

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