The Nano No-No: Export Launch Delayed Over… High Price?
Designed to be the world’s cheapest car, the Tata Nano is supposed to compete with scooters and three-wheelers rather than full-priced, global-brand vehicles. But the Nano has already seen several price increases since the target MSRP of $2,500 was announced, and the price in India for a base-level Nano is now about $2,870. And when you talk about such low prices, even small increases can wreak havoc on expected volumes, and as a result the Nano is turning into something of a flop (helped along by its pyromania problem).
A lot of people came to us for booking at the fair. At least 23 people confirmed their interest. But we’ve deferred launch of Nano at the last moment as we’re seeking a re-look at the price, which some say is too high.
The price? $7,900 after a 132% tax on imported cars. No wonder Bangladesh’s auto market is dependent on some 30k annual imports of reconditioned cars. Meanwhile, the Nano’s promise of becoming “India’s Model T” seems to be fading fast. But at least Tata has done something Ford was never able to do: make money on Jaguar and Land Rover…
More by Edward Niedermeyer
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em with all cheap cars is that it now has to compete against used cars. And given how well a 10-years old Japanese cars can still run, it's a tough job indeed. Same thing happened with the Yugo. So to sell the car has to have other good reason for people to buy it, and the Tata, being built to that amazingly low price, can offer none.
Like the Chrysler Airflow, the Nano is at the leading edge of new morphology. The Airflow had an aerodynamic all steel body. Today that's the norm, but then it was radically different, and it didn't sell. The Nano runs against the grain of modern automotive design by using parsimony as a design paradigm instead of complexity. This is the direction all manufacturers will have to go in the future as the promise of continually rising expectations for the middle class has gone into reversal, at least in the developed world. To reduce costs to meet the declining disposable income level of their customers, manufacturers will have to work toward simplicity. Neither they or their customers want to head in that direction today, but unless there is a marked reduction in the GINI income inequality index in the future, that's where we're headed.
What's interesting to me is that Tata's Ace pickup and Ace Magic jitney, small commercial vehicles, sell much better, about 150,000 units total.
I'm interested to see how the Magic Iris, a 5 passenger vehicle designed to compete with autorickshaws, with an 11 HP engine and a top speed of 34mph, sells. It was launched in May and I'm pretty sure that it shares components with the Nano.
I agree completely with, um, MrWhopee. But to add one more thing: I wonder if Nano sales in India would be even lower if the country allowed free importation of used cars from elsewhere around the world. I would defer to other commenters who actually live in India, for the real story, but I believe India has enormous barriers to the importation of used cars. I seem to recall various examples around the world where once such barriers were lowered, local sales of new cars dropped sharply... e.g. when Poland joined the RU.