A legacy that went wrong: What made the Tata Nano a failure
Every now and then, a magnificent dream miraculously turns into reality after years of dedication and hard work. The Nano started off as one such dream by Ratan Tata that eventually became reality as an inexpensive hatchback for Indians who commuted every day on their scooters or motorbikes. Those who braved the weather, the pollution, and the risk to commute to work and back simply to provide for their families deserved at least some respite, some soothing comfort.
For most, the Tata Nano would have been their very first car, while for others it was a dream come true. Yet, even though the idea was sound, the Nano failed to capitalize on the market potential and production has all but ended after sales of the company dropped to extremely low levels.
So, what could have been a great legacy, became one of the most important case studies in brand positioning and effective marketing for the automobile industry in India.
A number of reasons contributed to this. But, let’s first look at the car itself.
The powertrain was a 624CC SOHC petrol, rear engine and rear-wheel car with a manual gearbox that gave a very commendable 25 kilometers per liter. But, the four-door hatchback’s key selling point was its price.
Image credit: Sudhanwa, Flickr. (No changes were made)
Albeit more expensive than motorbikes or scooters, it was the cheapest car available on the market at launch, with more variants on the way which offered more options at a heftier price.
In fact, Tata had employed a number of techniques to keep costs low, including cutting down on all unnecessary parts by:
This was almost the same as its immediate competitor, the base model of the Maruti Alto 800, which was also more expensive.
The car eventually received a makeover in 2015 and, while the first iteration did not have a rear hatch, the new one did. It also received a facelift. But, this was not enough to draw people back to the Nano and sales kept following a downward trend, until there simply were none left.
Too much went wrong too quickly which made the Tata Nano a failure.
The hatchback sounded good on paper, but a number of issues plagued the car before production even started. That is where things really went wrong.
Let us take a look at the reasons why the Tata Nano failed.
Two-wheelers are a nimble little vehicle that let people navigate through traffic easily, while parking is rarely an issue. The same could not be said about the Nano. So, a major issue with the car was that it was not a motorbike.
While it was small, it simply was not small and convenient enough for people who were used to motorbikes. That was a major issue in the car’s marketability that Tata had not even considered.
Image credit: Lucianf, Flickr. (No changes were made)
Also, the Nano was more expensive to maintain than a bike and made ownership more expensive. The lack of standard features that are usually expected in cars also made the car feel cheaper.
Both these differences compared to bikes could have been overcome with a better and safer design as well as a more refined look and feel.
Tata was under the misconception that the low price would be enough to motivate people to buy the Nano. They did not account for their positioning it as a cheap car which, in India’s markets, translates to low quality. After all, who wants a cheap car that looks cheap and is poorly built?
Simply put, those who could afford a higher end Nano did not want to drive it.
Also, when people are status conscious, they look for things that make them look wealthier than their neighbors and colleagues. While a car sounds like it would be an upgrade from bikes, a cheap car that looks the part will always be shunned and will never be perceived as a means to boost one’s social status.
An older, used car that was more expensive when it was first launched would have more value for such a market than a car that was marketed as cheap.
So, bad marketing was perhaps the key reason for the car’s failure.
One of the most challenging aspects of marketing a car like the Nano is advertising. A basic rule of advertising is to create an emotional connection or a bond with the audience that makes them want to experience the product. Tata failed to do so with their advertisements for the car.
While some TV commercials were fairly good, most of their audiences simply could not relate to what they were seeing on screen. If the bad positioning was not enough, the fact that people also could not relate to the advertisements made things a lot worse.
In a country where emotions play such a vital role in everything, this disconnect spelled doom for the Nano before it even hit the roads.
One of the most significant problems with the Nano was its safety rating. Tata expected the car to receive four stars in the Euro New Car Assessment Program (NCAP) crash test. But, when Allgemeiner Deutscher Automobil-Club (ADAC), a German automobile club, tested it in 2014, it failed miserably. The car lacked airbags and proper adult protection. It also did not meet basic UN safety requirements and was not as safe as Tata had claimed and expected it to be.
The car was also very lightweight which made it a very bad choice for the usual Indian roads which are not always smooth as silk. That also meant that the car felt unsafe to drive because of the simple lack of bulk.
On top of that, several incidents were reported in which the Nano caught fire for mysterious reasons. Tata claimed the cause was faulty foreign electrical equipment linked to the exhaust.
To make matters worse, they refused to recall the cars and instead extended the warranty period to four years, while offering to replace the supposedly faulty parts in the cars already sold.
Tata’s bad public relations did not improve matters. The company simply ignored this crucial aspect and, while everyone focused on how many cars caught fire, no one talked about how many were running on the roads just fine. That also convinced the general public that the Tata Nano was so cheap because the company cut corners in the manufacturing process.
While this would not have been a major issue on its own, when combined with bad marketing and advertising, it became one of the biggest reasons for first-time car buyers to avoid the Nano.
Another major problem that contributed to the Tata Nano’s failure was the long wait time for delivery.
The Nano was supposed to be manufactured in the new plant in West Bengal. Unfortunately, Tata could not acquire land for the facility and instead had to start manufacturing from their Sanand facility in Gujarat.
Moreover, the lower production capacity could not keep up with the initial demand and many people simply did not buy a Nano early on because there were not any available.
The Tata Nano’s failure is a key learning point, even a case study, on how not to market and position a car. Bad marketing and public relations for a car that was not well designed and manufactured from the start simply added fuel to the fire.
From a novel but faulty idea to a possibly promising reality that never transpired, Tata simply could not deliver what it had promised and instead gave the people what they did not want: A cheap car that looked and felt cheap and was unsafe to drive.
The very first assumption that people wanted a cheap car resulted in a cascading effect that ended with the demise of the Tata Nano.
It simply was a car that was too expensive for the target market, yet too cheap for those who could afford it.
Why do you think the Tata Nano failed? Feel free to share your thoughts about the car and what possibly went wrong in the comments below.
Featured image credit: B. Balaji, Flickr. (No changes were made).
If you’ve been looking for freelance websites in India where you can get enough work to sustain your lifestyle, you…
Here are some unique way of thinking that gives self-made billionaire entrepreneurs an edge.
Bill Gates is raving about this book by venture capitalist John Derr
Rare pictures that show how Sachin and Binny Bansal went from young IITians to India's biggest e-commerce moguls.