7 reasons why Tata Nano did not take off as Expected

Imagine owning a new car at a price just a little higher than the latest iPhone! Tata Motors weaved a colorful dream for all Indians when they announced the production of the Nano. The concept had taken India by storm, right from the start. Even with the omen of the Singur fiasco hanging over its head, the Tata Nano rambled ahead with a strength that was admirable.

Unfortunately, however, the low-cost car that was aimed at the middle-classes across India did not take off very well. Here are a few reasons that could be attributed to the reason Tata Nano did not take off as expected and failed to make a mark in the Indian automotive industry.

1. Chipping away due to the ‘cheap’ image: The moniker ‘world’s cheapest car’ which had initially brought an interesting ring to it – as the promise of a car that was easily and economically accessible – is no longer being used as a lucky charm. In fact, Tata Motors seems to have finally grasped that such a positioning has made the Nano appear to be fragile and unreliable to the general public. In fact, Ratan Tata admitted the same in an interview to CNBC, where he said, “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.”

2. Looking at the ‘looks’ factor: The average Indian is more concerned about looks. In a country where even a fat, paunchy, bald man advertises for a tall, thin, fair bride – would a Tata Nano not appear as a blown up ‘match-box’ or what many people called a ‘covered auto rickshaw’? The design of the Tata Nano did not go down too well with the target Indian consumer, who concentrate more on how something ‘looks’. Low pricing notwithstanding, the average Indian wanted a car that his neighbour would envy. That didn’t quite happen with the Nano.

3. Negative publicity & failed PR management: Another major issue faced by Tata Nano was the negative publicity which seemed to overshadow it. Yes, a few Tata Nano’s caught fire – but, weren’t there a hundred other Tata Nanos that did not? The PR cell at Tata could not do enough to contain the collateral damage done by the spiraling negative publicity, which was one of the reasons Tata Nano did not take off.

4. Increasing competition of second hand car market: The small car industry in India has seen a sudden boost. According to an Indian Brand Equity Foundation report, the small car segment in India is expected to grow to 2.66 million by 2020. Datsun with its Redi-Go, Hyundai Eon, Renault A-Entry are some of the smaller cars that are all set to take the Indian market by storm, which definitely is another blow to Tata Nano. In India, it is a known fact that buyers always want to get a better deal at the same price or even at a lower price than the Tata Nano. This has been a major factor that people prefer to buy a second-hand car over a new Tata Nano. Moreover, financing options for a second-hand car are far easier to process than for the Tata Nano. In fact, in the tier 2 and 3 cities, where the Tata Nano was primarily targeted, it was seen to be a major difficulty for the middle-classes to get adequate loans and financing options when they wanted to purchase a Tata Nano.

5. Engineering marvel gone wrong? According to an IBEF report Tata Motors were pioneers in revolutionising the supply chain by making partners of Bosch and Delphi in the Tata Nano innovation. However, though the Tata Nano was lauded to be an engineering marvel at one level, on the other it seemed to have gone wrong. There was much that the Nano lacked, such as poor air bags, space for child-seats, etc. Max Mosley, chairman of the Global New Car Assessment Programme points out, “Poor structural integrity and the absence of airbags are putting the lives of Indian consumers at risk.”

6. Expectation versus reality: The Indian audiences had expected a wonder car which would be affordable to their pockets and give their image a boost. However, the requirements of the Indian middle-class was not met by Tata Nano: an average family of four had difficulty fitting in the car; there was no boot-space (the quintessential carry-everything-with-you Indian family’s biggest disappointment); the car was not meant for the rough Indian roads – which all went down very negatively into the Indian psyche, and hence the lack of acceptance of Tata Nano. The Tata Nano target segment was the tier 2 and 3 cities where the condition of the roads is not at all desirable, and the safety factor of the car was heavily compromised. People with large families also were unhappy with the leg and boot space, and the extreme lightweight of the car. Abhimanyu Chatterjee, an IT employee working with an MNC from Kolkata, who bought a Tata Nano when it was first launched said, “I got into the craze and bought a Tata Nano, but now it is lying in the family garage. I am not at all confident of taking the kids out in the car, because the car is so lightweight I think it is dangerous for families to travel in it!”

7. Problem of product placement: Every individual aspires to be something more than he is currently is. The same is true for the average Indian. Tata Nano, by positioning its car for the largely rural areas and placing it as ‘everyman’s car’ made a big mistake – as people did not necessarily want something ‘cheap’ but something that is more ‘aspirational.’ It is here that the Tata Nano went terribly wrong, and managed to alienate itself from the people it was actually aiming towards.

Today, the Tata Nano has been trying to revamp itself and bring about a modernized avatar, with more safety features and a better marketing strategy in place. Of course, the price of the car has also seen an increase, thanks to these changes in tactics and techniques.

It is now to be seen if the new and improved version of the Tata Nano takes off as expected, unlike the earlier version which was, in reality, quite a major disaster.

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