By on May 25, 2015

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It’s not often a car company, or any group of people for the matter, will admit mistakes – particularly billion dollar mistakes. That’s why the launch of the all-new Tata GenX Nano is refreshing. Based on former CEO Ratan Tata’s dream of moving Indians who transport their entire families on scooters and motorcycles into safer – albeit, basic – four wheeled automobiles, the very fact the original 2009 Nano was the least expensive car on sale anywhere in the world proved to be an albatross around the Nano’s tiny neck. Even Indians aspiring to the middle class of a developing country, it turns out, aspire to be seen in something other than the cheapest car in the world. They’d rather buy a used Maruti Suzuki Alto 800, the hatchback that more or less defines India’s entry level car segment. In recognition of that reality, the new GenX Nano will now be positioned as an entry level hatchback to more directly compete with the Alto 800, Hyundai Eon and the newly announced Renault Kwid.

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While some saw the Nano as India’s Model T, prompting comparisons of Ratan Tata to Henry Ford, the historical reality is while Henry Ford had a great idea in making cars for the average consumer, not just the wealthy, the Model T was far from the cheapest car on the market when it was introduced. While it’s true that productivity and cost improvements allowed Ford to eventually drop the price of the T to less than $300, that was in 1924. When the Model T was introduced in 1908 (as a 1909 model) it cost $850. By comparison, a Brush Runabout cost less than $500 in 1908. Henry Ford didn’t face the stigma of selling the cheapest car in the world when he launched the Model T.

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In a 2013 interview, while claiming it was never his personal goal, Ratan Tata admitted it was a mistake for his company to market the Nano on price.

“It became termed as a cheapest car by the public and, I am sorry to say, by ourselves, not by me, but the company when it was marketing it. I think that is unfortunate,” Tata told CNBC.

Around the same time, which would have been while the GenX Nano was being developed, brand positioning guru Jack Trout publicly suggested that Tata kill the Nano. But, in launching the GenX Nano, Tata Motors Senior Vice President for passenger vehicle product and chief Nano engineer Girish Wagh said, “Never did we have discussion about killing the brand.” Wagh admitted the company erred in not recognizing the “societal status” needs of those upgrading from a two-wheeler to an actual automobile and that the launch of the GenX Nano meant creating a “perception change” for both the Nano and for Tata as a maker of passenger cars. Wagh told the Economic Times, while they haven’t yet discussed killing the Nano, the relaunch is indeed a “make or break” effort for Tata’s sub-brand.

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When the original Tata Nano was launched, the “cheapest car in the world” was big news globally, even though it was designed primarily for the domestic Indian market. The Nano’s existence persuaded some very big automakers to reexamine their plans concerning low cost passenger cars and their strategies about export hubs and the developing world.

 

Bajaj Re60

Bajaj Re60. Image: Bajaj

In the Indian market a number of companies started developing low cost cars, with Maruti introducing the Alto 800, the latest version of the Suzuki Alto with a smaller, older engine. Scooter and three-wheeler maker Bajaj, working with Renault-Nissan, introduced their first four wheel vehicle, the RE60, a low cost, low speed car for the commercial autorickshaw market. The French-Japanese automotive alliance revived the Datsun brand with the $5,000+ Go for the Indian market. The Go hasn’t exactly gone as well as Mr. Ghosn had hoped, so Renault itself just introduced the $4,700 Kwid to India. The GenX Nano will be priced from $3,150 to  $4,550.

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For all that news and influence, Nano sales have been disappointing for Tata. Tata has sold only as many Nanos in six years, about 250,000 units, as they had hoped to sell in the first two years of Nano production. Currently, the factory in Sanand, Gujarat is operating at just 15 percent capacity and sales this year are down 20 percent from last.

 

Original Tata Nano instrument panel

Original Tata Nano instrument panel. Wikimedia commons photo

Tata acknowledges they misjudged just how aspirational Indian consumers are at even the lowest entry level of car ownership and they are now relaunching the Nano for the third time. It’s really more than a relaunch, though. The Nano has been substantially rengineered and equipped with features to reposition it as a city car, an entry level hatchback, hopefully removing the stigma of being the cheapest car in the world. That’s a stigma the corporate owners of one of the world’s storied luxury automobile brands, Jaguar, can’t really afford to have.

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After collecting consumer impressions from over 1,000 Nano owners and half again as many of owners of other entry level Indian cars, Tata is hoping that a safer, all-new design and features like an automated transmission and Bluetooth connectivity (not earlier available at the price point) will allow it to more directly compete with other small hatches like the Chevrolet Beat, Hyundai Eon, and the Maruti Alto 800. The Eon and Alto 800 each sell about ten times as many units per month as the outgoing Nano. Even the highest priced GenX Nano will still undercut comparable Maruti Altos by 50,000 rupees, or about $800 at current exchange rates.

 

Renault Kwid

Carlos Ghosn introducing the new $4,700 Renault Kwid. Round trip Business Class airfare on Air France for Paris-Mumbai starts at $2,500. Kinda puts global business into perspective. Renault photo.

There is talk, not denied by Tata, of a bigger 1.0-liter engine to be offered a year down the road in addition to the 660 cc twin that currently powers the Nano, along with a possible diesel option. Right now, the GenX Nano has about half of the power to weight ratio of the Alto 800, which has, as the name indicates, a 796 cc engine. Because the engine is relatively loaded down, the GenX Nano is projected to get slightly worse fuel economy than the Alto 800, about 21 km per liter of petrol vs 22.7.

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The Tata Nano began as Ratan Tata’s dream of getting Indians who sometimes transport entire families on motorcycles and scooters into an unquestionably safer, enclosed, four-wheeled vehicle. It then became what, I think, was a rather impressive feat of engineering to a price point, removing all but the essential. That price point was “one lakh” or 100,000 rupees, the equivalent of about $2,000 US when the Nano was launched in 2009. The project had setbacks from the beginning, with farmers and politicians protesting the original factory location, delaying production. And because we’re in the internet age, fires in a small number of early production Nanos went viral around the world, harming the car’s image. Then Ratan Tata’s dream ran into the fact the families riding on motorcycles had aspirations greater than owning the world’s cheapest car. Indians would apparently rather drive a used example of a more expensive car.

 

Original Tata Nano

Original Tata Nano. Wikimedia commons photo

The first relaunch stressed the value of the Nano by emphasizing low monthly payments, but that only reinforced the image of the Nano as a cheap car. A second relaunch of the slightly more upscale Nano Twist models ran into the fact that, by then, competitors in India had products like the Beat and Alto 800 on the market.

 

Tata Nano Twist

Tata Nano Twist

This time, Tata has abandoned the cheapest car in the world scheme and decided to make a better Nano. As mentioned, much of the design and engineering of the original Nano was about taking things out, like using three lug nuts instead of at least four. By comparison, the GenX Nano’s development was more about putting things in than taking things out.

 

Maruti Alto 800

Maruti Alto 800

Tata says with the use of more high strength steel, crush zones, and side intrusion beams, the Nano’s body is much stronger and safer. It now also has a functional hatch with up to 110 liters of cargo space in the trunk. The original Nano was a four door, not a hatchback. Though the engine has been more or less unchanged, it’s been recalibrated for better urban fuel economy based on Tata engineers’ real-world observations of driving in major Indian markets. Mechanically, the biggest change is the availability of an automated manual transmission. While Tata is no longer marketing the Nano as the cheapest car in the world, the launch publicity did mention that the GenX Nano will be the “most affordable” car with an automated manual transmission.

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In addition to the structural and drivetrain changes, the GenX Nano has a new instrument panel, a stronger air conditioner (something very important with India’s climate), power steering, modern connectivity, and better NVH performance. While the overall silhouette hasn’t changed, the GenX Nano has a new face and rear end, with new bumpers, lamps and a honeycomb grille. The changes are intended to appeal to young, aspirational Indians, particularly women who will like the “Easy Shift” automated manual. Women take a targeted role in the GenX Nano’s marketing and dealers report 20 percent of those who have already booked a GenX Nano – which is already on sale with deliveries scheduled in about two months – are females.

When the original Nano was introduced in 2009, I saw more than a couple of online comments from consumers in North America wondering why a car that cheap couldn’t be sold on this continent. As it turns out, a car that cheap can’t be sold in great numbers on the Indian sub-continent, let alone in North America, where something as relatively advanced and luxurious when compared to the Nano, like the Mitsubishi Mirage, struggles in the market. In time, the Nano project may turn out to be a success. But, whatever success it will have will now be based on its virtues as an automobile compared to competing products, not by being the cheapest car anywhere on the planet.

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can get a parallax view at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS

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17 Comments on “Will the GenX Nano Erase Tata’s ‘Cheapest Car’ Stigma?...”


  • avatar
    Arthur Dailey

    What I would like to see is a direct comparison test between the new Nano and the Smart4Two which is sold here in Canada.

  • avatar
    RideHeight

    I like and understand this vehicle but for the shopping cart wheels. Wouldn’t primitive roads require larger ones?

    Even as is, I’d enjoy a fore/aft 2-seater version as a take-home shopping cart. Beautiful greenhouse and ground clearance.

  • avatar
    robc123

    Why do the marketing people try putting the blame on practicality?

    Is the indian market known for frivolous spending- I don’t know?

    The real reason this failed was that when competing solely on price they ran aground the used market.

    Really this looks fine for a little grocery getter and appointment running. its not like mr. suburb is going to sneer at how his camery is so superior to the nano- 95% of cars are s-boxes anyways. Is my ego that fragile that I need to wrap myself in $1000 car payments and alacantra to feel superior to my fellow man? No body cares.

    • 0 avatar
      RideHeight

      “Really this looks fine for a little grocery getter and appointment running.”

      Strongly agree and the topic is dear to my heart. The majority of driving I and millions of others of my generation do needs neither speed nor aerodynamics.

      Goofy little bubble cars like this delight me with their airiness, visibility and in this case ride height. No one would imagine they can be an only car in America but for going to the barber shop or the UPS store or even as a short distance work DD, why not?

      I think the success of the Encore and its follow-ons support this view. Boomer Buggies!

  • avatar
    mshenzi

    For a long time, VW marketed the Beetle in the US on price: “Under $2000 Again.” Yes, different era, different market and different target consumers, different brand identity context, different point in the life of the model, etc. Still, I find it really interesting that in 21st century India, ‘new’ has gotten trumped by ‘used but a bit nicer’ when it comes to automotive aspiration, and that being the lowest cost new car turns out to be more of a stigma than a selling point. For many– a majority?– of US car shoppers (not necessarily TTAC types!), buying new seems to be inherently more aspirational/preferable to buying used, regardless of depreciation’s impact on prices.

    I guess the next question will be whether a nicer, pricier Nano can shed the stigma of the market identity that it was launched with.

    • 0 avatar

      If I’m not mistaken, the Ford Pinto was introduced at $1,995 specifically to compete with the VW Beetle. However, as you say it was a different era.

      As late as the mid 1950s, Ford, Chevy and Plymouth unashamedly advertised as being part of the “low cost three”.

      Jack Baruth has written about how the introduction in the early 1970s of the Chevy Caprice and Ford LTD, cars from mass market brands that featured luxury options previously only found on upmarket brands, ultimately hurt Cadillac and Lincoln (and BOP and Mercury too). That was about the same time you stopped seeing (except for Yugo) low prices touted in car ads, particularly with numbers and dollar signs.

    • 0 avatar
      derekson

      Isn’t it likely that a large part of the reason it worked in the 60s and into the 70s was how shitty cars were in terms of longevity and reliability? A cheap new car is more appealing compared to a used car when the used car is likely to be a nightmare in maintenance and upkeep. Cars back then were practically falling apart by 50,000 or 60,000 miles. Nowadays people are disappointed if a car needs major maintenance before 100k or 120k miles, so buying a used car with 40 or 50k isn’t really that big of a deal. When used goods still have a long usable life left in them, their relative desirability compared against cheaper new goods changes a lot.

  • avatar
    RHD

    It looks like the Indian market is ripe for the likes of Carmax.

  • avatar
    theonewhogotaway

    I’d like to see some of the better models of those cars in the $10K range in the US. That category of a used car replacement is severely lacking. Used to be filled by the likes of Geo Metro, Ford Festiva, Daihatsu Charade in the early 90s and Civil and Corolla in the 70s. Having the entry market at around $15K in the US is nutty…

  • avatar
    RideHeight

    Man, it would sure be easy to rotate tires on this little goomer.

  • avatar
    Gedrven

    “Automated manual”? What is this nonsense? An automatic is an automatic.

    It’s refreshing to see an interior design like that. Though even from a small photo it’s obvious the materials are scrapings off the bottom of the barrel, but at least it’s esthetically clean, functional, and doesn’t have a giant screen like seemingly everything these days.

    • 0 avatar
      niky

      It’s simply to differentiate between a torque converter automatic and a clutch-equipped automatic.

      A continuously variable transmission is an automatic, but we differentiate those, too.

      More to the point, though… AMT doesn’t necessarily mean fully autonomous operation. It can also simply mean an automated clutch system that still requires user input for gear selection.

      (Yeah, we really should stop calling automatics automatics and start calling them torque-converter equipped gearboxes… but then, some CVTs and DSGs have torque-converters, too…)

    • 0 avatar

      It’s a conventional 5 speed manual fitted with a Magnetti Marelli system that operates the clutch and shifts the gears, hence automated manual. For the GenX Nano they’ve added a creeping function for city traffic. The system is based on technology that has been used in Formula One, but I’d say that it also has some antecedents in some of the experiments with automatic transmissions in the 1930s, like preselectors and the like.

      http://www.magnetimarelli.com/excellence/technological-excellences/amt

  • avatar
    niky

    Aspirational marketing aside, the Nano was never going to prosper against the Alto, at any price.

    The Alto is at the price and size point that marks it out as the “Corolla” (or Camry, if you’re the type) for the Indian market. It’s just the right size, just the right price, lasts forever and a doodle to keep running.

    Had to chuckle when they admitted the Nano’s overstressed 660cc wouldn’t get the same economy as the 800 in city driving. The Maruti/Suzuki 800 is indeed incredibly economical… and for those wishing for a cheap urban runabout in the US, probably fits that role much better as well. Of course, if you’re over six feet tall, nobody is sitting behind you in an 800… but it’s as cheap as a motorcycle to run, and maintenance is dead easy.

    Just don’t expect to get anywhere very fast in one.

  • avatar
    hifi

    “Tata acknowledges they misjudged just how aspirational Indian consumers are at even the lowest entry level of car ownership and they are now relaunching the Nano for the third time.”

    Even Indian consumers will hesitate to buy a product that is known to self combust. As a new car, the car is seen as being horribly unreliable and plagued with safety defects. If a car rolls off the showroom floor that way, then it’s reasonable to assume that they won’t get any better as they age.

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