Demand Forecast for the Tata Nano in the US

Decision-Making Framework for Tata in the US
1) Build out a network of dealerships versus utilize existing distribution networks (Mercedes, Volvo, Land Rover, Jaguar, etc.).
2) Import all completed cars from India versus setting up an auto manufacturing plant in the US or Mexico.

Demand Forecast for the Tata Nano in the US
An initial forecast of demand for the Nano in the US is a necessary baseline for future calculations. Several factors will determine how many Nanos Tata is able to sell in the US. To achieve a forecast, three specific figures appear to form a solid balance: (1) The number of Smart cars sold in the US market during its first three years of sales; (2) The number of Tata Nanos sold in India last year and forecast for this year; and (3) The price differential between the Nano and potential competitor vehicles in the US marketplace. The Smart car is similar in size to the Nano, and the Nano fills the same super-cheap void in the Indian car market that it would fill in the US. Exhibit 1 details these figures, and generates a 3-year demand forecast for the Nano. As with both the Smart car and the Nano in India, second and third-year sales have been lower than those of the first year. This is explained partly by consumer hype about the new products and the added environmental awareness that these products encourage. Due to global events, the cost of gasoline is high in the US compared to traditional prices, and as such will encourage additional near-term demand for the Nano. The final demand forecast stands at 36,000, 28,000, and 28,000 units in years 1, 2, and 3, respectively, of sale in the US market. This produces a combined 3-year sales estimate of 92,000 Tata Nano cars.

Other posts on Tata Motors related to US expansion:

Executive Summary: Tata Motors' Expansion into the US and other Foreign Markets
Tata Motors Recent Financial Performance and Customers
Method and Rationale for Tata Motors' Expansion into the US
Demand Forecast for the Tata Nano in the US
Tata Motors Expansion into the US: Retail Pricing Forecast
Tata Motors Expansion into the US, Build Dealerships vs. Dealer Network
Tata Motors Expansion into the US, Import vs. Auto Mfg Plant
Works Cited for Tata Motors Expansion into US