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Tata To Stop Production Of Nano & Here's Why The Cheapest Car In The World Couldn't Survive

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Tata Nano was an ambitious project kickstarted by the Chairman of the Tata Group, Ratan Tata. Ten years back when it was launched, everyone's eyes were on the "cheapest car" in the world and how it brings about a change for the Indian middle-class. Fast forward today, the dream is up in smokes as Tata Motors has decided to end the production of the Nano due to poor sales. 

While India is a developing market and automobile sales have been increasing steadily, the Nano just couldn't find a customer base for itself. The company produced only one unit in the month of June compared to 275 units produced in the same period last year. In comparison, passenger vehicles have seen a jump of 38 percent in sales. 

Tata To Stop Production Of Nano & Here's Why The Cheapest Car In The World Couldn't Survive© Reuters

In fact, Maruti Suzuki, the country's largest automobile maker posted a growth of 40 percent. To top that, India still hasn't picked up on electric vehicles and consumers are actually opting for smaller cars that are easier to drive in densely populated urban areas. So, why did the Nano fail? 

I've spoken to a lot of marketing experts as well as automobile aficionado's and the major point of failure has been Nano's marketing. The company wanted to make a point, that the base variant should cost only Rs. 1 lakh, excluding taxes, which was never practically achieved. The base variant, in turn, was nothing but a metal box with an engine. 

Tata To Stop Production Of Nano & Here's Why The Cheapest Car In The World Couldn't Survive© BCCL

Purchasing a car is everyone's dream, and when you are open to spending on a four-wheeler, you'd want it to have at least some basic comfort features. These were missing from the base variant of the Nano, and if you wanted them, the cost escalated quickly to nearly at least Rs. 3 lakhs. 

Now, it must be noted that Tata's marketing of the vehicles was always around it being the cheapest car in the market. The "cheapest" tag didn't actually go well with the buyers, who are under societal judgment and pressure of having a status when purchasing a four-wheeler. The company tried multiple new ways of marketing it, giving new colours, improved interiors and fuel efficiency, but all this faded in front of the "cheapest" tag. 

Tata To Stop Production Of Nano & Here's Why The Cheapest Car In The World Couldn't Survive© TATA

In the last few years, Tata did realize what's wrong with their marketing efforts and tried to shift the campaigns. It tried to woo the young buyers by giving the car a more youthful aura and marketing it as an urban traveler that can easily seep through traffic. But, irreparable damage was done long back. The people's perception about the car wasn't going to change. 

In comparison, the competing cars like Alto 800, Eon, and the Kwid have been posting amazing sales results. These cars, even though small and in the same price bracket, are actually perceived to be just a "car" and not the "cheapest car". 

Tata To Stop Production Of Nano & Here's Why The Cheapest Car In The World Couldn't Survive© MotorBeam

Secondly, the Nano was plagued with electrical issues at the beginning that saw cars catching fire. The Nano's engine is located in the back, similar to where Indan rickshaws have an engine. Even the exhaust note has often been compared to that of a rickshaw. All these minor factors also hampered its sales and made the buyers keep their distance. 

There is no doubt the Nano indeed is a revolutionary product. India has long been known for cutting costs and focusing more on the utility than the looks or other superficial factors. There are lakhs of families out there who own a car, just because of Tata's efforts. These users do not regret their decision of opting the Nano. But unfortunately, the dream car remained a dream for the company. 

Source: Bloomberg

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