Tata Tigor Styleback launched at 4.7 lakh onwards!

Automobile brands always reveal the pricing of their new cars at the last moment.  Prices are never announced when the car is being shown in an auto show, or when specially invited media people and bloggers are allowed to drive the car (often called as Media drive) or when advance booking is opened or even when cars have started arriving at the dealer’s yards. Pricing of the car is maintained as a closely guarded secret till the last minute and is announced only one the day of commercial launch. It is going to be the same process for newly introduced Tata Tigor. While it was shown in the Geneva motor show, it was unveiled to journalists and bloggers in Delhi last week but the pricing will be known only on tomorrow, 29^th March, the date set for its commercial launch. Many bloggers unaware of the fact that media drive is not commercial launch, without fail ask a question about car's pricing and will be told to wait till commercial launch.

Instead of sitting idle till 29^th and waiting for Tata’s announcement, I made an attempt to get into the minds of those who might be working out the car pricing right now and try to derive what could be the final price of the car. In this post, I have worked out a pricing for the Tigor’s various variants and I have explained the rationale for the same. How correct I am and how close my guess is to the reality will be known on 29^th March.

Before I proceed to construct Tigor’s pricing, let us understand why Automobile companies do not announce the price in advance

1 It is not decided yet. Honestly speaking, people who are involved in the design, develop and even those who do marketing for the new car won’t be knowing the price of the car till last minute. While rest of the teams are busy in pre-launch activities and promotions, a dedicated team in the HQ will be doing the number crunching considering hundreds of parameters trying to decide what can be the right price for the car, such that it is cheaper enough to attract the customers while ensuring profitability for the company

2. Input from market is often used to fine tune the final pricing:  If the company gets lots of pre-bookings and inquiries, if the public response is highly favorable car manufacturer can make more money by pricing the car slightly higher, without losing out on the demand. If the excitement is low, company may be forced to price it at a loss.

3. Fear of competition: If the price is announced before dealers are ready to take booking and deliver the cars, there is a huge risk that either competition will also reduce their price and poach customers or customers will use the low price of new car to bargain with competitor to get lower price.

4. Volume prediction is needed to assess per unit cost of fixed expenditure. Volume prediction is key. There’re many fixed cost in developing a car- cost of R&D, Design, Marketing etc. Let us say 100 Crore rupee is spent on these activities for Tigor. This amount needs to be recovered from each car sold. If car maker can predict that 2 lakh units of the new car can be sold, then they need to recover 5000 Rs from each car sold, to recover R&D and marketing expenses. But if the prediction is that only 50000 cars will be sold, then they may have to recover 20000 per car. Similarly, if higher sales can be expected, car maker can negotiate better with suppliers and vendors and save a few thousand rupees per car and pass this advantage to customers.

Price prediction for Tigor is relatively easier because we have price details of Tiago, the hatchback version of Tigor. Similarly, its competition (xcent, Dzire, Ameo etc) and their prevailing pricing is clearly known. If the car is totally new and competitions are few, then this game of predicting price gets difficult.

So what will be the pricing of Tata Tigor?

Below are the key assumptions/ground rules

1.           Tigor needs to be priced slightly higher than its small car variant, Tiago. Usually the price difference between hatch and compact sedan versions are around 50k to 60k ex-showroom
2.            Most of Tigor’s competition models are priced at about 5.5 lakh onwards. Tata Motors will be keen to undercut them by a lakh or two at least, to win over customers heading to competition showrooms.
3.       There's Tata Zest on the upper side. Tigor's price has to be in-between Tiago and Zest.    

Price difference between hatchback and compact sedan for various models

#	Model	Brand	Base Petrol	Top-end Petrol	Base Diesel	Top-end Diesel	Price difference range	Remarks
1	Grand i10 and Xcent	Hyundai	86k	76k	63k	76k	63-86k
2	Figo and Aspire	Ford	66k	55k	51k	74k	51-74k
3	Swift and Dzire	Maruti	53k	59k	51k	57k (ZDI MT)	51-57k
4	Polo and Ameo	VW	-01k!					Ameo is cheaper!
5	Tiago and Tigor	Tata	?	?	?	?

Current competition prices (Top end with AMT /AT is not considered)

#	Model	Brand	Base Petrol	Top-end Petrol	Base Diesel	Top-end Diesel
1	Dzire	Maruti	5.5	7.18	6.74	8.24 (ZDI MT)
2	Ameo	VW	5.47	7.3	6.64	8.5 (Highline MT)
3	Aspire	Ford	5.48	7.04	6.59	8.43
4	Xcent	Hyunday	5.55	7.3	6.24	8.24
5	Tigor	Tata	?	?	?	?

Read Tigor's comparison with its competition in this separate post.

If you notice above table, you see that most of the competition has their starting price at around 5.5 lakhs and end at 8.5 lakhs. Obviously Tata would like to undercut it. Most of the competition- Xcent, Aspire and Ameo offer ABS as standard across the range. Some even driver airbags. But Tigor’s base variant is guaranteed to miss these safety feature, which should enable them to save much more than 50-75k easily and achieve a price tag way below 5 lakhs.

What adds to Tigor’s price over Tiago?

Tigor gets a touchscreen, climate control, rear armrest on the interior, longer body, wheelbase, better suspension bigger boot and different headlamp assembly. Few of these (like climate control and touchscreen) are expected only in top variant while others are applicable to all variants

What Tigor misses compared to Zest?
Zest gets more powerful engine (only slightly, like 4 to 5PS more). Zest's variants begin at XE and end at XT, compared to Tiago and Tigor which get cheaper XB and more loaded XZ variants. Zest is available in Automatic (Diesel) as well.

Keeping all the above in mind, I am guessing Tigor's price to start from under 4 lakhs for cheapest variant and end at about 7 lakhs for most expensive variant, ex-showroom, Delhi. Let us see how close my guess is..

Current ex-showroom price (Delhi) for Tiago and Zest

	Base Petrol (XB)	Petrol Mid (XT (O))	Petrol Top end XZ (MT)	Diesel Base (XB)	Diesel Mid (XT (O))	Diesel top end (XZ)
Tiago	3.24	4.6	4.99	3.99	5.4	5.78
Tigor (My Guess)	3.95?	5.36?	5.95?	4.79?	6.38?	6.89?
Zest	5.35 (XE)	6.81 (XT)		6.52 (XE)	8.84 (XT)
Tigor Actual	No XB trim, 4.7 (XE)	5.41 (XT)	5.90 (XZ) 6.19 XZ(O)	no XB Trim, 5.6 (XE)	6.31 (XT)	6.8 (XZ) 7.09 XZ(O)

Above is assuming ex-showroom Delhi. If ex-showroom Mumbai, add a few 2-3 % more.

Disclaimer:

I am not an automobile pricing expert. This is just a guess work. You may use it for reference but please wait till 29^th for official announcements

I do not have any input on cost (manufacturing or otherwise)- above computation is purely based on information available in public domain such as competition model prices and feature differences.

Post Launch Update:
Tata Motors have decided not to offer a bare minimum XB variant. Cheapest trim is XE for Tigor and top of the line being XZ optional. Price begins at 4.7 lakh for XE Petrol and ends at 7.09 for XZ(O) diesel, Manual. I have updated the table able- my predictions have been reasonably close. Best wishes to Tigor and Tata Motors

December 2020 Update:

Prices have increased. Tigor now costs between 6.91 lakhs (XE, on road, Karnataka) to 9.43 lakhs (XZA+, on road Karnatak)

Deciding between Tigor, Tiago and Altroz *