End of an Era-A tribute to Tata Nano

Tata Nano will be officially discontinued from April 1, 2019 as new safety norm that mandates ABS and other such expectations kick in. Nano is already out of Tata Motors portfolio- it is no longer listed on the website, not displayed in the showrooms and not promoted in the ads. I read that its product is also stopped, resumed if any only if some confirmed orders are received, which if any you could possibly count on one hand.

But between 2009 when it was originally launched and a sad demise a decade later, Tata Nano has seen many ups and downs. Tata Nano is a car very close to my heart. I was part of at least half a dozen events with this car. Major ones include
Nano was unique in many aspects
  • Though its length and width was small, due to its extra height and innovative design, the cabin space was more than its competition
  • High ground clearance, small turn radius
  • Very innovative ways of cost cutting- 3 nuts per wheel instead of 4, one wiper instead of two, central speedo console and many such cost saving techniques were employed
  • Rear engine (compared to front mounted engine on every other car)
  • The whole idea of providing a family car within an affordable price
Though Nano received a huge welcome, lots of bookings (lottery system had to be adopted to decide initial buyers), over time Nano sales tanked. Despite Tata Motors putting their heart and soul into it, the sales wouldn't revive. Was there something fundamentally wrong with the car itself or it fell victim to a series of unfavorable circumstances is something to debate. It is very easy to give judgment on what went wrong or what should have been done differently now- I am not interested in doing that- I know everyone involved had best intentions, did their best to make Nano a success. But many things didn't go in Nano's favor

Me speaking to media about Tata Nano Superdrive in Bengaluru
10 things that probably didn’t work in Nano’s favor
1. It was positioned as 1 lakh car, but actual price was 1.7 lakh onwards
Though Nano was positioned as a 1 lakh rupee car, the final price was anything but 1 lakhs. The lowest CX variant without AC, music system and various other features was 1.35 lakhs ex-showroom, some 1.7 lakhs on road. The top end version was over 2.2 lakhs on road. Those who were drawn to showrooms by the cheap price tag were put off by actual on road price, hampering sentiments and sales.

If only Tata Motors didn't have to shift the plant from West Bengal to Gujarath, a lot of things would have been different:
  1. With the money saved, each car could have been priced a bit cheaper
  2. Tata Motors could have been able to fully encash initial hype, by avoiding delay in delivery and selling lakhs of Nanos.
  3. With large number of Nanos on road, the model could have been declared a success, which could have ensured sustained demand
  4. If Tata Motors could meet their break even numbers, Nano project could have been financially viable
2. Two wheeler buyers didn't upgrade
Idea that two wheeler owners will upgrade to a car if given at reasonable price didn't cut either. Nano's price, at about 2 lakhs, was 3-4 times that of a 100-125cc motor cycle. Two-wheelers take less space, give better fuel economy, easy to zip in traffic, no need to pay toll, less parking fee - these advantages couldn't be replaced by a car, however cheap. May be the story would have been different if Nano could have been sold at its original intended price of 1 lakh rupees, just 30-40% more than a decent family motorcycle/scooter. But at 4 times the price, Nano couldn't impress its target audience of family men who carried 3-4 people on a two wheeler.

On the hindsight, how bad traffic in our cities would be even if 10% of two wheeler buyers had bought a car instead?

3. Indians probably didn't want cheapest of things
The idea that cheapest things sell more is also proven wrong. 25 lakh Skoda Superb sells in more numbers than many 10 lakh cars. Indians don't necessarily need a cheap car- they need value for money products and solutions. "Cheap" also affects social status, which a car is supposed to elevate. After the initial hype about Nano subsided, curiosity is gone, Nano lost its appeal. Alto continued to be India's top selling car year after year, as people saw more value in an Alto that costs a lakh more but has slightly more powerful engine, better resale value and so on. While Nano’s early customers got lots of attention, over time with nano failing to sustain interest it was more like “buy Nano only if you can’t afford anything better”

4. Fire incidents didn't help.
A bunch of Nanos catching fire at various parts of India didn't help Nano either. Though these were isolated incidents, the bad press was enough to scare prospects. It is not like only Nano catches fire- Audi, BMW and many branded cars have also caught fire once a while- but they either manage to suppress the bad news with very effective PR or people are more forgiving when it comes to premium cars catching fire. Fire incidents lasted only for a short duration, but the impact of it on sales was permanent.

The rear mounted, slightly under-powered (compared to Alto/M800) made more noise than competition and probably didn't induce confidence in buyers.

5.Volume never picked up
Nano’s price was heavily subsidized, suppliers were pushed to the limit to keep the cost low- all these would have worked out only if there was a great sales volume. The assumed break-even was never achieved, constantly putting pressure on cost, affecting morale of teams involved. Unfortunately the volumes never picked up and break-even was never possible. Huge unsold inventory was never envisaged.

6. Nano Twist
Twist was introduced with some cosmetic enhancements, better interiors but mechanical aspects largely remained the same. I remember Zoomcar adding lots of Nano Twists to its fleet but few months later I saw them at the scrapyard- probably no one were booking them enough to keep the cars operational, there were no buyers for second hand nano, affecting its resale value, forcing Zoomcar to scrap the cars.

7. Tata Motors dealership experience wasn't helping either
Back in 2011-2012, Tata Motors passenger cars didn't have the right reputation. Many assumed they are good only to be a taxi. Many of my corporate colleagues would simply avoid Tata Cars under the preconceived perception that they are not good. Eventually Tata Motors did focus on revamping sales, service and show room experience. Tata started building good cars like Tiago under the new IMPACT design philosophy under the leadership of Pratap Bose. Lots of dealerships got overhaul. Footfalls increased a bit, Tiago and Nexon could sell in respectable numbers  Situation was lot better by 2016-17 but that was bit too late for Tata Nano

8. Tata's two platform strategy
Tata Motors has decided to have only 2 platforms (the foundation on which cars are built- like chassis and other fundamentals). Under this strategy Tata would build only two kind of cars- One bigger SUV specific platform named Omega) on which Hexa, Harrier etc would be based) and one smaller platform-Alpha on which premium sedans and hatchbacks would be based. Nano was too small to fit on Alpha and maintaining a 3rd platform for Nano like cars was not economically viable, given the lack of sales and demand for such super small cars. Thus Nano had to leave Tata Motors portfolio

9. The smart city car Avatar- GenX Nano
In 2015 Nano got a major facelift- the GenX Nano was a major facelift- with AMT option, openable rear boot, better interiors and so on. But again, these enhancements meant increased price, eliminating the price advantage Nano had with its competition. From 'world's most affordable car' Nano is now pitched as a smart city car. This gave a new lease of life to Nano, sold in decent numbers after sales but after an year or so later, it couldn't sustain interest. Tiago was now the best entry level car in Tata's stable, which for a small premium over Nano offered a lot more.
An article I wrote about Tata Nano

10. Only 1 Nano made in 2018
Only one Nano was made in June 2018. While buying a car people look for multiple factors beyond the features and price of the car- will I get good resale value? Will the brand continue to supply spare parts and other after sales support? Will this car last 7-10 years? Will my peers ridicule me for my choice of cars? With number of Nanos that could be seen on the road dropping regularly, customer confidence took a hit. This meant even those who might have had an inclination to buy a Nano were turned back by above factors. Ousted Tata Group Chairman Cyrus Mistry stating "Nano project is not viable but is run purely for emotional reasons" [News] bolted final nails in Nano's coffins, with its feature now obvious to one and all.

Above: Nano with a sunroof- an optional accessory- details here

Sad to see Nano go away. Though I never bought a car, Nano will remain close to heart. I hope all existing Nano customers get adequate after sales support.

A whole lot of other cars also will be ending their journey this year- Tata Sumo, Tata Safari, Maruti Omni and so on. Autocar has compiled a nice report here.

What are your thoughts on Nano? Do you think it was a good car in bad circumstance or it had fundamental flaws from beginning? Anything Tata Motors could have done differently for better sales? Do comment below.

8 comments:

  1. Instead of seeing it emotionally you have to see it practically - what Cyrus Mistry did was for truthful and in the best interests of shareholders.

    Firstly very poor choice of the factory to be built considering the political scenario - TATA's should have done their basic homework well,secondly and most importantly is the quality of the car - it speaks for itself -when you dont have a good quality car which is reliable and it can last this is the end result of it -which is the natural progression

    When you compare it with something like Maruti 800 ,it lasted for so many years inspite of so much of competition was simply because of the great quality fundamentally.You dont have to take my word but the results from the market make it crystal clear time and again.

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  2. It's the positioning that went wrong somewhat with the Nano. They tried to position is as the people's budget car but quite didn't live up to the expectations of the car. And from a business point of view, this was a dog product (BCG Matrix) and they had to stop it.

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  3. I own a Nano and I love my car, but only for short commutes :)

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  4. NaNo that is a double negative both in English and Hindi they should have called it HaanYes and it would have zoomed in sales :P

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