By on January 24, 2012

Launching the “world’s cheapest car,” the Nano, into one of the world’s fastest growing auto markets, India, looked like a surefire concept back in 2009.  Today, it looks stupid. Like many surefire concepts, the Nano turned out to be a dud. Says India’ Economic Times:

“After several years of disappointing sales, it has now become clear that the snubnosed hatchback’s unique selling point — its price — was actually a commercial sticking point. 
Rather than embracing the Nano, the status-conscious consumer base that was its prime target has largely shunned the “cheap” tag of the $2,800 vehicle and opted for slightly pricier rivals, or second-hand vehicles costing the same.
” 

The Nano plant, with an annual capacity of 250,000 units, is running  at less than 50 percent capacity. It produces only 10,000 a month, says R Ramakrishnan, business head of Tata Motors passenger cars. Oddly enough, Tata sells about twice as many pricey Jaguars and Range Rovers through its acquired JLR division.

Tata boss Ratan Tata conceded this month that mistakes had been made, and that selling the car as a “poor man’s” vehicle was wrong .

 

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19 Comments on “World’s Cheapest Car Not A Good Idea...”


  • avatar
    highrpm

    This has always been true about cheap cars – the rich don’t want them, and the poor wouldn’t be caught dead in them.

    This is why the Toyota Echo never sold well despite getting comparable fuel economy to the Prius.

    • 0 avatar
      jmo

      despite getting comparable fuel economy to the Prius.

      A compact with 29 City 37 Highway is compatible to a midsize that gets 51 city 48 highway? Um… ok.

      • 0 avatar
        highrpm

        Look at it this way. The Echo cost about half of a Prius. It used about 3 gallons per 100 miles driven. The Prius was using 2.4(?) gallons per 100 miles driven. A small difference considering the more-than $10,000 price difference between the vehicles.

        People bought the Prius for its enviro statement. They didn’t want to be seen in a cheap “poor man’s” compact car. Arguably, the Echo is better for the environment if only because a battery pack did not need to be manufactured for its use.

    • 0 avatar
      APaGttH

      The Echo never sold well because it was an ugly, plastic cladding laden, disaster of a car with all the charm of an old school metal roller skate. The one great redeeming quality it was well powered, sprinting to 60 in about 8 seconds; impressive for the class. Engine and tranny was Toyota reliable but that’s where it ended.

  • avatar
    another_pleb

    I think the trick with small, cheap cars is to market them as a rich (wo)man’s plaything/fashion accessory but have the price of the basic model cheap enough for the proletariat.

    Tata should have restricted initial supply to top-of-the-range Nanos available from boutique dealerships in upmarket areas of Delhi, Mumbai and Bangalore before expanding to cheaper neighbourhoods.

  • avatar
    amac

    To many people, if not most people, cars are aspirational. An object of desire. Few people aspire to drive a cheap and ugly piece of crap, no matter how poor they are.

  • avatar
    JohnTheDriver

    Given this “cars” price and build quality, perhaps it’s sales figures should be compared to that of riding lawn mowers? Just a thought.

  • avatar
    forraymond

    WHAT??? No comparison the GM for the poor marketing?

  • avatar

    When they’re trotting that piece of garbage out to compete with gently used Maruti Suzukis, it’s no wonder it didn’t sell.

  • avatar

    Wasn’t this car involved in some rather dangerous looking fires?

    Not even the poor want to buy a car likely to burn them to death!

    D

  • avatar
    TW4

    The car was not a bad concept, and discouraging manufacturers from creating high-value products is not a particularly good tack for automotive industry critics.

    The marketing concept was inherently flawed, and Tata is guilty of projecting his psychological attributes onto his fellow Indians. He reasoned that poor people and lower-middle class would see the Nano as an intelligent, high-value purchase that could improve the quality of life over the long term. Unfortunately for Tata, a majority of the poor do not make intelligent, high-value purchases. In India, most poor and middle class simply haven’t been exposed to purchasing power long enough to understand the complexities, and in Western meritocracy, the lower-middle class are often lower-middle b/c of the financial decisions they make. The problem may be particularly acute in India due to the sociological effects of the caste system, which may encourage people to live above their means as a way of trying to leap out of their caste.

    However, the Nano and its high-value cost structure will help some people who are clever enough to see the big picture and who have an intuitive understanding of personal finance. Those people will be afforded opportunities they would never have had without the Nano. Some of them may go on to be great successes and some of them may credit the vision of Ratan Tata and the value he created for Indian citizens. In that regard, for the establishment of a cultural narrative and creating new opportunities for intelligent Indians who may be stuck at the bottom of the socio-economic ladder, the Nano is a good product.

    I don’t think it is a particularly good idea to besmirch a man’s vision or his reputation b/c he doesn’t profit from the value he creates for others. Tata has shareholders for that kind of abuse. The general public should give him a consolation prize–a pat on the back–for trying to do something that could have had a positive impact on his country. Marketers should be ringing Tata’s phone off the hook b/c he clearly needs their help.

    Time will give us a clearer picture. If the Nano has any redeeming qualities, I suspect we will see its reputation boosted in 15-20 years time. The people who used the vehicle to lift themselves out of poverty will begin singing its praises. Their accomplishments and status will give them authority, and Indian society may re-evaluate the Nano.

  • avatar

    Tata sells a couple of light commercial vehicles, the Magic Iris jitney and the Ace Zip pickup, that as far as I understand share some components with the Nano, and they’ve been well received. While the average scooter or motorcycle riding Indian may have more aspirational goals than the cheapest car in the world, small business and auto-rickshaw owners see the Iris and Zip as meeting their needs.

  • avatar
    wstarvingteacher

    Probably should have charged more. If people perceive something to be cheap they look down on it. Charge a little more and give some value added trinkets and it would probably have sold more. Not real familiar with the nano but building it like the van above with some passenger seats probably wouldn’t have hurt anything. Perceived value.

  • avatar
    niky

    A car is a luxury in India, a motorcycle a necessity, and a micro-truck is a business opportunity. It’s no wonder the Nano sells poorly in this regard. Because, let’s face it, it’s no fun buying a car unless you can rub it in your tuktuk riding neighbor’s face.

    And then consider that the Maruti Alto costs not much more, is more conventional and has a wide distribution and repair network, is capable of more speed and great economy, AND is incredibly rugged and reliable (for a small car).

  • avatar

    Bring ‘em here Mr. Tata they’ll sell!

    Lots of Brazilians have no trouble buying cheapest car in market. In fact, most don’t care and some are even proud.

    To prove business case: Old Fiat Uno. Fiat tried to kill it. theytook out all sound insulation. Even the bak window wiper motor went exposed for all to see. They did a ‘design refresh’ that gave it the face of a Lada. No deal, Brazilians kept buying them. So much so that many consider it the new Beetle. WHerever yhou go in Brazil you are sure to see one.

    Now the Fiat has given up to market forces and put some lipstick on its unloved child (Way make up, some sound buffering, they even covered up the back wiper motor!) sales have even increased . 10 000 a month are sold.

    So, Tata, increase engine to 1.0 (or buy from Fiat PWT, they’ll sell), put power steering and AC at least as options, and for God’s sake make the rear hatch functional, keep the price under 20 000 reais (whopping more than initial Indian price) and ylu’ll be selling anywhere from5 to 8000 a month in 2 yrs time. I guarantee.

  • avatar
    boltar

    Could it be that it’s the quality associated with the $2800 price, rather than the $2800 price itself, that customers weren’t happy about? Nah, too obvious.


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