Tata Nano: The Cautionary Tale of “The World’s Cheapest Car”

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Tata Nano silver

Fighting its reputation almost as long as it’s been sold, the Tata Nano finally seems to have died an official death in India as the “world’s cheapest car.” Economic Times reports that the India-based industrial conglomerate, which also owns Jaguar Land Rover in the UK, produced only one Nano in June, down from 275 in the same month last year. Exports were 0 (zero) vs. 25 in June 2017.

The automaker has acknowledged that the car in its “present form cannot continue beyond 2019.” Its demise is a cautionary tale on how not to position a brand—consumers don’t value “cheapest” lest they appear cheap, and there’s an art to creating a masstige brand. Nano sough mass, but it never had class or prestige.

The concept seemed like a good idea at the time. In 2008, when Tata introduced the jelly-bean-shaped mini-car as a $2,000 vehicle at a time when enabling vehicle ownership by citizens in emerging markets was challenging and the global Great Recession had carmakers worldwide scrambling for escape routes.

In India, true images of families perching four or five to a two-wheeled vehicle and weaving through perilous traffic had become iconic, and so its home market seemed a natural one for Nano.

The car “featured” an eco-friendly, bi-fuel engine that fetched about 54 miles a gallon. But it provided only 36 horsepower and a top speed of 65 mph. The world’s cheapest car fit that description more than just price-wise, as Nano debuted with only a speedometer and fuel gauge in the instrument panel — and certainly no onboard GPS system. The car also was missing many other things normally expected even in the cheapest automobiles in the west, including air conditioning, a radio, power windows, power steering and air bags.

And as it turned out, Tata did perhaps too good a job of advertising the low price of Nano. “Harping on the ‘cheap’ price tag was certainly the car’s undoing,” Shombit Sengupta, an India-born, Paris-based strategist, told Forbes. “Young Indians do not necesssarily think cheap is best; they like things that have embellishments and dazzle.”

Five years post-launch, the car had sold only 250,000 units and sales were plunging. Tata weighed other markets for Nano, such as Indonesia or Europe. Last year, an Indian inventor demonstrated an autonomous Nano. But Tata was tired of investing in its little non-starter.

Fast-forward to this summer, as Economic Times derided Nano as “a second-rate vehicle with a tendency to catch on fire. Meanwhile, in line with a growing and vibrant economy, vehicle sales in India have been picking up, from motorbikes to cars to trucks. Sales of passenger vehicles including SUVs jumped 38 percent from a year earlier.

RIP Nano. We hardly knew ye.

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