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Tata Motors Nano: Too Cheap for India's Buying Audience?

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author photo by Autotrader January 2011

When Tata Motors went about designing the super cheap Nano a couple of years ago, they focused on a low cost car with low cost parts and production. Since it was produced in India, inexpensive labor was a given.

To keep the weight low, they lightened the engine to two cylinders vs. three to four, they installed only one windshield wiper and they mounted 12-inch wheels that use three lug nuts instead of four or five.

Keeping it simple meant no radio, no power steering, no power windows and no air conditioning. The instrument panel only had the basics-speedometer, odometer and fuel gauge. Oh, and no glove box either.

Tata Motors, the company that has since purchased Jaguar and Land Rover, had big hopes for the small car. However, sales for the $2,200 car are slowing down, according to a recent article in The Washington Post.

Safety problems are the first reason. Since April 2009, at least six Nanos have gone up in flames from fires starting in the exhaust or electrical systems.

Poor marketing and competition from “slightly more expensive cars” from companies like General Motors India and Maruti Suzuki have also hurt the Nano. Those automakers have introduced campaigns targeted at India’s young families and call-center workers, with claims that their cars are better and more reliable.

The original vision for the Nano was that it would “put the dream of car ownership within reach” of India’s 300 million (and growing) middle class. Spreading suburbs, multiplying highways and a young working population has placed India in the second-fastest growing car market after China.

And while the low sticker price looked like a good thing in the beginning, it’s not as appealing now. India’s newly minted middle class considers owning a car the ultimate sign of status. Yet, the Nano is synonymous with something cheap, said Ashish Masih, assistant editor of India’s edition of What Car? Magazine.

In a country where many of the top-selling automobiles cost under $7,000, the Nano is seen as a poor man’s car. “People don’t want to take that image along with them. If they change that feeling, sales might pick up again,” said Masih.

According to the Society of Indian Automobile Manufacturers, only 509 of the tiny vehicles were sold to dealers in November and about 7,000 Nano’s are parked outside the factory in Gujarat, India. There are currently around 70,000 Nanos on India’s roads.

But Tata Motors is not giving up. Debasis Ray, head of corporate communications for the company, said it has launched a broad marketing push and added a free four-year manufacturer’s warranty.

“For thousands of customers, particularly in the hinterlands, who do not own cars, entering this category is a significant decision,” Ray said. “The good news is our customer satisfaction studies with current Tata Nano owners indicate that over 80 percent are satisfied or very satisfied with the car. We have a lot of confidence in the Nano.”

The true test is whether the current buying audience will have that confidence.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
Tata Motors Nano: Too Cheap for India's Buying Audience? - Autotrader