By on October 17, 2011

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).

Apparently Year-To-Date sales of the Nano were just 29,377 units through September, down from last year’s 37,402 result over the same period. In order to make up for weak sales in India, Tata has begun planned exports to neighboring countries, but that effort is running into problems as well. Abdul Matlub Ahmad, director of Nitol Motors, the Nano’s Bangladeshi distributor tells the AFP

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

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11 Comments on “The Nano No-No: Export Launch Delayed Over… High Price?...”

  • avatar

    Let’s put the serious quality and safety problems aside. Why is the Nano such a dud in its native country?

    The Nano has failed in India for the same reason Tata thought it would be a historic success: Aspiration.

    Tata believed that there were millions of Indians just waiting for a car cheap enough to step up to. They were wrong. Four wheels and a roof does not an aspirational vehicle make. There’s nothing aspirational about buying or driving anything touted as the “The World’s Cheapest Car.”

    The car looks like a toy, and doesn’t engender confidence or dignity when driving it. People who see it instantly recognize that a Nano is the very best you can do in the Car department. By comparison, the majority of Indians still ride motorbikes.

    Owning a decent motorbike is far more dignified than driving the cheapest piece of junk you can buy that sticks out as such like a sore, Pikachu-like thumb.

    • 0 avatar

      The reasoning above is debatable. Aspiration is one factor, but not the key or only factor. There are several reasons why it is not doing well:
      1) For $2K more, it is possible to get a much larger car such as the Maruti Alto.
      2) For around the same price as a Nano, one can get a very good used Maruti Alto.
      3) While the initial costs are low, its operational costs are quite high – to a person used to riding a bike. Specifically, the fuel economy is around 20km/l which is as much as half that of a bike. Also given that diesel is subsidized relative to gasoline means that there are many diesel cars that actually have lower operational costs than the gasoline powered Nano.

      4) The initial fire issue, which was probably highly inflated, no pun intended!
      5) The aspirational issue that you mention.

      Tata is working on a Nano Diesel that should be out early next year. It will cost around $500 more, but will address head on the cost of ownership issue that has made it uncompetitive viz two wheelers. Many believe this could be the game changer for the Nano. We shall soon see!

      • 0 avatar

        While what you say makes logical sense, I have to disagree with you. What philadlj said was spot on – it was aspiration that ruined the sales of the Nano.
        The middle class of India is growing, and along with it – their aspirations. The car is the one of the easiest way to show that you have ‘arrived’ in society and the Nano is not the vehicle to send that message. Period.
        Think of the stereortypical BMW owner – brand hogs without any real idea as to why they would want to pay so much money – and apply that in some sort of reversed/ twisted logic to every other car in India..

    • 0 avatar
      Vipul Singh

      Completely agree with your analysis, philadlj. I have never heard anything except snide remarks from the general public about the car. Now *I* admire the what Tata calls “value engineering”, but to everyone else (or so it seems), it is not something to be respected or admired, but just a job done on the cheap. The other day, I even heard a mechanic at the Tata service center criticise the car before a FIAT Punto customer (FIAT cars are sold and serviced by Tata Motors in India), not realizing that the Nano owner was standing next to them! The look on the Nano owner’s face said it all. I doubt he would recommend the Nano to any of his close friends, purely due to these ‘soft issues’.

      Another point: the ex-showroom (without registration and insurance) price for the base variant, for this car is as high as INR 150,000 ($3100 or so). In some states, the “on the road” price (as it is called here) climbs to $3800. It is hardly the “1 lakh” (INR 100,000 car that it was touted to be. So some of the target customers may even suffer from sticker shock.

      That said, I hear that September retail sales (not dealer dispatches) are 30% up from August on account of better advertising and easier / cheaper finance.

  • avatar

    Since some of the best Indian businessmen went to school in America, they’ve probably taken home with them the American penchant for overpricing everything.

  • avatar

    Who at Tata turned JLR around? I think JLR fixed itself all Ford and Tata did was feed it cash when it needed it. JLR has 3 great brands in a world that cant get enough premium products….. Ford simply sold too early. Mullaly got this badly wrong.

  • avatar

    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.

  • avatar
    fred schumacher

    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.

  • avatar

    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.

    • 0 avatar
      fred schumacher

      During research for the design brief for the Magic Iris, Tata discovered that the number one desire of autorickshaw drivers was for a vehicle with four wheels. Four wheels provides a rise in status, and so, unlike the Nano, the Magic Iris is a step up rather than a step down. I would expect it to sell well. In fact, I would consider it to be the best best iteration of “the most for the least” ever invented.

      The Magic Iris and Ace are examples of appropriate technology. In terms of transportation value, the Magic Iris provides an order of magnitude increase over walking speed at a very low cost factor. To go 60 mph only doubles the speed of the Magic Iris but requires a much greater investment in vehicle and transportation infrastructure.

  • avatar
    Glenn Mercer

    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.

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