Why didn't the Tata Nano meet its expected success in India?
- After the failure of its Nano launched in 2009 (less than 300 000 sales in six years, while the target was three to five times greater) the Tata Motors group has thoroughly reviewed its model by presenting the Tata GenX Nano that remains the cheapest vehicle in the world market. The opportunity for us to review the reasons for the failure of this model that was supposed to be a mass market vehicle.
- The intention with the Tata Nano was to offer Indian families using two/three wheel vehicles, a car for them to travel in safer conditions on the dangerous roads of India and be protected from the weather. The idea seemed good.
- Strong marketing campaigns accompanied the launch of the vehicle, creating a favourable "buzz" and arousing interest and curiosity. But Tata Motors could not maintain the "hype" created to launch the Nano. TheIndian carmaker, which aimed for 250 000 annual sales initially and 500 000 in the future, saw its model reach with great difficulty a peak in sales of less than 80 000 units in 2012. In 2013, fewer than 20 000 Tata Nano found buyers (see graph below).
- Several elements can explain this failure:
1. No match between vehicle positioning and needs: This non adequacy can be analysed in different ways: The vehicle was not adapted to the needs of the target market. For example, the boot could not be opened from the outside. While users of 2 and 3 wheel vehicles are used to carrying many different objects. These defects have since been corrected but left a negative impact.
2. The vehicle price rose sharply compared to the original positioning. At its launch, the Tata Nano was supposed to be sold at a starting price of 100 000 rupees (or 1 300 Euros), while 2-3 years later its price ranged between 145 000 rupees (2 000 euros) and 265 000 rupees (3 600 Euros). Admittedly the vehicle was improved (additional equipment, increased security) but it is far from the initial promise.
3. Instead of marketing the vehicle as a competitor to two/three wheel vehicles, Tata and the Indian market considered this vehicle like a car which was "ultra low cost". The "ultra low cost" necessarily refers to the owners' economic status.
In simplified terms: Tata Nano = poor family. While no customers wants to be referred to based on his social condition.
In simplified terms: Tata Nano = poor family. While no customers wants to be referred to based on his social condition.
4. The limited capacity of the plant at its launch, especially during protests following the construction of the initial plant (Singur, West Bengal), which was eventually transferred to Sanand (Gujarat).
5. The need to be on waiting list to buy the Nano and delays in delivery (because of production capacity).
6. A negative media wave following different cases of spontaneous fires that caused questioning of vehicle safety.
- However, Tata still believes in a market to replace the two/three wheel vehicles. And following the statements of the President of Tata, it is not impossible to see a totally new version of the Tata Nano, which would be marketed both on the Indian market but also on the Indonesian and European markets (within a different positioning).
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