Here’s Why Tata Nano Failed

Bhubaneswar: It’s curtains down for world’s cheapest car this April. With sales in just double digits for the last few months, it is no surprise that Tata Motors had no choice but to stop production of Nano.

The Nano, which was conceived as Ratan Tata’s dream of building a car for everyone, faced problems beginning with production issues to marketing failures. The Singur fiasco led to a 18-month delay in the car’s production. This was followed by a few units catching fire which Tata addressed by giving a free extended warranty. But the damage was already done. These along with the stigma attached to buying the cheapest car and the hype surrounding it which made the whole issue public didn’t help Tata, according to a report published in Harvard Business Review (HBR) by Matthew J. Eyring, the president of Innosight, a strategy innovation consulting and investment firm.

Speaking to Best Media Info, Brand Strategist Ramanujam Sridhar said, “In India, a car is a status symbol. People here don’t want to buy a cheap car, no matter how well it has been engineered or how wonderful the features are.”

The same was echoed by S Venkatesh, Marketing Director, RW Promotions, who too believes that the ‘cheapest car’ label worked against it. He explained, “Cars in this country are definitely aspirational. They are not a necessity. People might own a car and still travel to work by a two-wheeler. I think the Indian consumer is still not ready for a car like that.”

Also as it turned out, the car actually sold for a price much higher than Rs 1 lakh, the price at which it was initially promoted. The HBR report indicated that Ratan Tata’s dream of people upgrading from 2-wheelers to the Nano wasn’t happening at all. Instead, the few that were sold served the purpose of a small 2nd car used for errands.

Ironically, even auto experts had praised the car for its size, efficiency, roomy interiors, AC and more. Even the consequent add-ons such as power steering, CNG in the ‘people’s car’ which had garnered more than 2 lakh pre-bookings failed to meet people’s aspirations.

Even Ratan Tata, in an interview to CNBC, admitted that the ‘cheapest car’ tag failed the Nano. “It (Nano) 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,” he said.