World's Cheapest Car Not A Good Idea
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 .
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.
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).
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.
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.