Tata Nano drives downhill with zero exports over last six months

‘One’ seems to be an unlucky number for Ratan Tata’s dream project, Tata Nano. Launched at the starting price of Rs 1 lakh, India’s third largest automaker Tata Motors’ budget car dropped to an all-time low with just one unit produced in June as against 275 in the same month last year.

The “people’s car”—whose volumes can now be counted on the fingers of a hand—reported total sales of just three units last month as compared to 167 in June 2017, according to company filings.

In 2011, Tata Nano ventured into exports starting with Sri Lanka and Nepal but even its overseas sales have taken a huge hit. According to Society of Indian Automobile Manufacturers (SIAM) data, the company hasn’t exported a single Nano in the last six months.

Some agencies also reported that Tata Motors has stopped the production of the Nano and will now be making it only on request from the company’s dealership.

What went wrong for the wonder car?

Touted as the world’s cheapest car when it was launched in 2008, the Nano was envisioned as an upgrade from a two-wheeler and the company received more than 200,000 bookings within a year of its launch.

But as the price of the car went up (to Rs 2.99 lakh today), so did the instances of it catching fire and other faulty systems. And despite being well-engineered, cost effective and more spacious than its closest competitor, the Maruti 800, the Nano failed to make it in the land of Ambassadors and Premier Padminis, which still boast of an emotional resonance with Indian consumers.

According to industry analysts, young and aspirational buyers of India did not want to be seen with a “cheap” car and Ratan Tata by his own admission in a 2013 media interview said that the company made the mistake of promoting the Nano as the cheapest car.

"Somewhere down the line where Tata Nano is concerned, I think it was made to look like a poor man's car and it wasn't attracting the people who would want to buy it. Whether it was lacking on features, or safety parts, all that became a question," says Sridhar V., partner, Grant Thornton India. "I suppose Nano is trying to come back into the electric vehicle foray that Tata's are into."

Tata Motors, also known for luxury cars like Jaguar and Land Rover, said that no decision has been finalised on halting the Nano’s production or re-launching it.

“The Nano has been an iconic car reflecting the innovative spirit of the company and its leaders. Decisions on product life cycle are a holistic view taken after considering the market developments, regulations, and the emerging competitive landscape,” said a Tata motors spokesperson.

“Production planning of a car is a conscious management of demand, system inventory, and planned efficiencies. Therefore, speculating on the fate of a car based on a month’s production figure is something the company would not like to participate in.”

Despite rolling out several new variants to give a new spin to its image and position it as a funky, youthful product, the Nano failed to survive in a country like India where cars are considered no less than a status symbol.

Industry trends suggest that sales of bigger cars are on the rise. In the passenger vehicles segment, people have ditched mini hatchbacks such as the Hyundai Eon, Maruti Suzuki A-Star, and Renault Kwid. Instead, they are showing more interest in compact sedans and bigger hatchbacks such as the Maruti Suzuki Celerio, Hyundai Grand i10 and Tata Tiago.

Industry analysts say people are not only going for cars in higher segments but are choosing to buy more expensive versions within those segments. “Besides rising aspirations of the Indian middle-class, another reason driving this trend is that carmakers have started making more feature-rich products at affordable prices,” said industry analyst Sridhar V.

With a handful of takers for Tata Motors' most hyped car, is it the end of the road for the Nano?