Cheapest car tag dealt a blow to Tata Nano?

The different variants of Tata Nano GenX in Delhi currently have an ex showroom price between Rs 2.25 lakh to Rs 3.2 lakh. The GenX Nano XE, the base variant is priced at Rs 2.25 lakh and the top-end model GenX Nano XTA (AMT) is priced at Rs 3.2 lakh. The GenX Nano XM CNG’s base variant is priced at Rs 2.83 lakh.

The Nano doesn’t hold a monopoly over this price segment anymore. Several factors like the entry of cars like the Datsun Go which is available for just a few thousand rupees more has dealt it a blow. The other options available to buyers compared to the Nano around the same price bracket are more powerful, bigger and hence appeal more.

Nano’s failure can be attributed largely to a PR and marketing mess-up by the company that failed to gauge the prestige a customer associates with a car purchase. Also the “cheapest tag” also evokes doubts on quality. Speaking on the failure of Tata Motors to position the car properly, Ratan Tata had said in an interview to CNBC, ““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.”

The company tried to mend its mistake. In 2013, it released videos to give the car a feel-good factor. It started exporting units to Thailand, Sri Lanka, Indonesia and Africa. However, the results were bad again. In April 2013, not a single unit of the Nano was exported. After Cyrus Mistry took over from Ratan Tata, the company came up with a fresh campaign to brand the Nano as a Smart City Car. This was aimed at targeting the youth and urban buyers who would benefit from small car that is easily navigable on city roads and doesn’t take much parking space. Fresh investment in the sinking brand to the tune of Rs 3,000 crore also failed to turn Nano’s fortunes.

The car was targeted at lower middle class families aspiring to own a car. In most cases, this would also mean that it would be the only car in the family and hence either too small or cramped for a family of say 5-6 people. Also, the car’s on road price, even back in 2012 was a minimum Rs 1.62 lakh. Some of the cost increase could also be due to the shifting of Nano’s production facility from Singur to Sanand. A favourable decision for Tata in the Singur case could’ve kept the prices of the car down to some degree.

In the past Tatas have said that they will not close down the Nano project. However, Ratan Tata had indicated that they might market a fresh variant of the car in a country where the price is not a stigma and then bring it back to India with that name under the same or another brand.

While the company has launched new passenger models like Tiago, Tigor, Hexa and Nexon, the company has been working on an electric car which could be a strategy shift to make the affordable car project viable again. Last week, Tata Motors and Coimbatore’s Jayem Automotives struck a strategic partnership for bringing out the 48-volt battery driven “Neo” cars.