Cheap Is Not Always In, How The Nano Flopped

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.