The Nano No-No: Export Launch Delayed Over… High Price?

Edward Niedermeyer
by Edward Niedermeyer

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

Edward Niedermeyer
Edward Niedermeyer

More by Edward Niedermeyer

Join the conversation
5 of 11 comments
  • MrWhopee MrWhopee on Oct 17, 2011

    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.

  • Fred schumacher Fred schumacher on Oct 17, 2011

    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.

  • Ronnie Schreiber Ronnie Schreiber on Oct 17, 2011

    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. icon 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. icon

    • Fred schumacher Fred schumacher on Oct 18, 2011

      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.

  • Glenn Mercer Glenn Mercer on Oct 19, 2011

    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.