By on April 23, 2013

The Tata Nano is the world’s cheapest car but nowhere close to being a good seller. If you factor in the economics of demand and pricing, you will feel the Nano should have done better, much better. Sadly it hasn’t and there are several reasons for it. Firstly the car was positioned as the cheapest car in the world. Nobody (at least not in India) wants to drive the “CHEAPEST” car. Had Tata Motors positioned the vehicle as the most affordable car in the world, things could have been different for the Nano. Or so the theory goes. The truth is probably closer to the fact that people, once they have a little money, don’t want to drive a car that shouts “I can’t afford more!” That type of reverse snobbery is left to very developed markets, or Jay Leno’s garage.

The Nano was getting a lot of bad press due to many fire incidents. Tata Motors wasn’t proactive in resolving the issue, being firm there was no issue with the car. A quick recall would have really boosted customer faith in the Nano but that never happened. The company did make upgrades later, then the fire issue subsided completely.

Tata is trying its level best to boost Nano sales, which led to an all time low of 1,500 odd units per month in 2013.

The company is pushing the Nano through many mediums, offering lucrative schemes and also bringing out bespoke models to attract public (Nano Art in Motion, Rs. 20 crore plus Nano filled with jewellery, etc). Now Tata Motors has realized the Nano is too cheap for its own good and plans to reposition the car completely, with a heavier price tag and a long list of features, which might do the trick. CNG and diesel versions of the Nano are also planned (the Nano is currently offered with a gasoline engine only) which could lure buyers and help them utilize Nano’s production facility which sits at 90% idle capacity.

Faisal Ali Khan is the editor of MotorBeam.com, a website covering the automobile industry of India.

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31 Comments on “Cheap Is Not Always In, How The Nano Flopped...”


  • avatar

    Hey Faisal!

    I think it really doesn’t have to do with the fact that it was the cheapest car in the world, but rather that consumers of brand new cars in India are still upper middle class (class B). Unlike what has happened in Brazil, where the C class and even some in the D class have been able to buy brand new for the first time ever, and they don’t give a hoot about being the cheapest car.

    In other words, up to an extent, a real massification of the car has happened in Brazil, but not yet in India. Had the Nano been launched in Brazil even 10 yrs ago, I’m pretty sure it would have been a flop. In that time, real middle class shoppers were rare. Upper middle class people would also have been “embarrassed” to be seen in a Nano. Middle middle class and lower middle class people on the other hand are just glad and proud to be able to afford a brand new car (many times for the first time).

    As is, the Nano would need some things to be a hit here. A functioning hatch, a reclining seat, bigger tires and be cheaper 10-15% less than the cheapest offerings of the mainstream brands (Fiat Mille, Renault Clio and Ford Ka).

    • 0 avatar
      Summicron

      I think you’re spot on with your ‘massification’ theory. And I agree that people who previously could only afford scooters and mopeds would be overjoyed to move up to a Nano.

      The flip side of the “I can’t afford more!” stigma is “Hey, I started with nothing and now I’ve earned this! So F-off!” But maybe that’s easier for an American to say than it would be for someone in a literally caste-ridden place like India. Hope not.

      • 0 avatar

        “Hey, I started with nothing and now I’ve earned this! So F-off!”

        I think that sums up very nicely the attitude of people who had nothing and in a space of a decade or so suddenly find themselves in a position to actually afford a nice thing or two. To afford some stuff that gives them some comfort and that many more fortunate take for granted.

        Maybe Brazilians and Americans are more alike than many suspect!

        • 0 avatar
          Summicron

          “Maybe Brazilians and Americans are more alike than many suspect!”

          Well, you guys sound cooler than we do when you speak English :-)

          • 0 avatar

            Hahaha! Thanks for the compliment Summicron.

          • 0 avatar
            Thavash

            I also think that when you’re poor , you value your dollars ( or rupees ) more , and quality is the main attraction. The nano fire scandal couldn’t have helped. I see that Suzuki is the top seller in India , seems like they prefer to save up and spend a bit more on a Japanese brand that take a chance on a Nano.

    • 0 avatar
      MrWhopee

      Isn’t that the point, Marcello? The Nano’s supposedly for those who can’t afford cars, not those who can afford them already. In other words, it’s for those C and D class, not the upper middle B class, they already have plenty of choices. And for the A class, Tata also has Jaguars and Land Rovers for them.

      I think the Nano just weren’t able to offer enough value for those people to consider them over 10-years old Maruti or something. Why buy the Nano when a 10-years old Maruti (or the Hindustan Ambassador?) offers more room, more comfort, more prestige (I got me a ‘real’ car!), no less reliable or costs more to run, and this fact was proven already, unlike the Nano?

      • 0 avatar
        jeffzekas

        Exactly! The real competitor with a cheap new car, is a slightly used car. This is why Yugo failed in North America: for the cost of a new Yugo of dubious quality, you could buy an excellent, well made, high quality used Honda Civic.

        • 0 avatar
          cargogh

          This reminded me of a Yugo I saw on the used lot at Dyer and Dyer Volvo in the late ’80’s. The prices on any of the windshields always seemed higher than new. A bronzy orange Yugo was parked and I wondered what they’d have it at. The paint was already flaking off the hubcaps, but it was for sale for $4995 or something. I think their advertised price back then new was $3990. At least that dealership was consistent.

    • 0 avatar

      Agreed, but people have the money as they still prefer to get the Alto instead, which has lesser space.

  • avatar
    gslippy

    The Nano’s failure shows how consumerism has gripped the whole world, which is both a good and bad thing. Good, in that people still aspire to better their station in life. Bad, in that people too often live beyond their means or become snobby.

    After this experience, Tato would do well to rename the car’s successor.

  • avatar
    cargogh

    I had a 1978 Fiesta S a long time ago. It also had 12″ wheels, but somehow the Nano makes them look like 8″.

    • 0 avatar
      CJinSD

      The tires on cars like the ’78 Fiesta, ’75 Civic, and ’88 Festiva had outside diameters of 22 inches, while the tires on the Nano are 19.5 inches in diameter. The Nano is also 10 to 13 inches taller than past cars with 12 inch wheels.

  • avatar
    burakvtec

    the wheels are like a joke :)

  • avatar
    rudiger

    It was okay for Tata to scrimp to be able to sell the cheapest car in the world.

    What they needed to spend money on was ‘marketing’ the Nano.

  • avatar
    rmwill

    I drove a Nano in Delhi this past December. The biggest reason to not buy is the rear cargo access is only through the rear passenger doors. FAIL.

  • avatar
    TonyJZX

    how coming the old BMC Mini was such a success? it too was an odd little economy car and yet it swept the world

    ratan needs to look into the past and see why it succeeded

    the car is largely ok but irrelevant

    • 0 avatar

      Well, the Mini was well designed, for a start. The technology underpinning it was entirely unique in the industry, so it felt groundbreaking and special.

      The marketing of a mini car in conjunction with the also-new mini skirts was brilliant :). It was associated with all that was cool and fun, not cheap.

      Of course today’s mini simply cannot be defined as a cheap car and its high manufacturing costs give no lessons to anyone wanting to make such a car :(.

      D

      • 0 avatar

        The original Mini predated miniskirts by 5 years. The car came out in 1959. Wikipedia says that Mary Quant’s first miniskirt was designed and sold in 1964. While the Mini was later associated with “swinging London” (I think three of the Beatles owned Minis, Ringo had a Radford Mini with a custom hatch so he could put his drum kit in the back), it was already well established by the time Quant’s new skirts and dresses hit the market. She named the skirt after the car, so there is a tie in, but the Mini was selling 200,000+ units a year by 1964, and actually sales were down in ’65, ’66 and ’67 relative to 1964, so I don’t know how much that tie-in helped sell the car.

      • 0 avatar
        krhodes1

        The original Mini was nowhere near the cheapest car in the world. I don’t think it was even anywhere near the cheapest car you could buy in Britain. It was also famously a money-loser for BMC. It was a small car, but it was not as small on the inside as many more conventional small cars due to the clever engineering. In no way comparable to the Nano, whose existence is centered around being the cheapest car money can buy. In my opinion it is just TOO cheap and compromised – ultimately if you can scrape to afford a Nano, you can probably scrape a little more and buy something better for 20% more.

        • 0 avatar
          d002

          The Mini was the cheapest car in Britain (by a wide margin), unless you count the two stroke motorcyle based bubble cars like the Lloyd and Peel.

          It wasn’t the biggest selling car though, the Morris 1100, Ford Cortina, Ford Anglia/Escort and Hillman Minx/Hunter all outsold it.

          Neither was it a good car ; it stalled whenever it rained and overheated when the temperature soared above 15 degrees C. It’s just that most of its competitors were even worse.

          BTW, the Indian middle classes have bought the awful “I can’t believe it’s a car !” 3 cylinder Suzuki Alto in droves, so their tightfistedness is well documented.

          • 0 avatar
            jeffzekas

            The Mini was successful because it was CUTE and it was CLEVER– much like many popular women I know!

  • avatar
    thelaine

    Mitsubishi paid them to produce it so people would think the Mirage was cool.

  • avatar
    chriskauffman

    I am wondering if the Nano should’ve been positioned as something other than a car. It is, after all, the world’s safest scooter. In such a light it would’ve been evaluated in a completely different way.

  • avatar

    Hey, anyone have some pricing for the “cheapest car in the world?” I agree it shouldn’t have been positioned as such, but I’m curious how the thing was priced.
    Haha, great idea positioning as the world’s safest scooter! Maybe slip handlebars in instead of a steering wheel?

  • avatar
    Lie2me

    Maybe, now this is out there, just maybe instead of promotions and gimmicks to move cars if the manufacture (Tata) addressed the issues and showed some effort towards making the cars better… I don’t know why this concept seems to escape most manufacturers when time after time consumers have beaten a path to the door of the guy building a better car (scratches head)

  • avatar
    hreardon

    I recall once reading that Porsche’s response to the question: “when will you release an entry level car?” was: “we already have one: it’s a pre-owned Porsche.”

    To some extent that sentiment is applicable to Tata’s Nano. While they offer a ridiculously cheap car (and ‘cheap’ is the correct word here), I would bet that most people would prefer to purchase something used in the same price range as a new Nano.

  • avatar
    x-hdtestrider

    Nano Flopp…….isn’t that like 10000 giga bites ?

  • avatar
    Car Guy

    The pictures all over the internet of the vehicle on fire didn’t help their cause…..


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