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Ratan Tata Reveals The Reason Why Nano Failed!

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Ratan Tata has finally revealed the reason behind sluggish sales volume of Nano: It is none other than the term which is synonymous with Nano – “The cheapest car”.

Buying a car in India is associated with social status and prestige; if a person owns a car, he is assumed to be successful and settled. It differs hugely from the Western market, where cars are more of a necessity rather than luxury. If a person buys a car in US, no one gives a damn unless it’s a Ferrari or Lamborghini.

Indian market is different, and a different marketing strategy was required for selling Nano, which is arguably world’s cheapest car. But the word ‘cheap’ in its marketing campaigns spoiled everything. It had to be subtle yet hidden from the promotional messages.

Something terribly went wrong here.

He said during an interview with CNBC,

“It (Nano) became termed as a cheapest car by the public and, I am sorry to say, by ourselves, not by me, but the company when it was marketing it. I think that is unfortunate.”

This single statement sums up everything which went wrong with Nano. It was a huge PR and Marketing mistake by Tata.

Nano was launched in the year 2009, and it has never witnessed a positive growth in its overall sales. Last quarter ending September, 2013, its sale plunged 74% compared to last year, as only 10,202 units were sold in this period. And previous quarter ending June, 2013, the sales went down 88% as only 948 units were sold in the month of April, 2013. Last month, in October, its sales were down 28% compared to last year and the trend will unfortunately continue.

It is not that they are not trying. They tried to highlight the feel good factor by introducing awesome videos and started exporting to Sri Lanka, Indonesia, Thailand and Africa. But the results were again dismal. In fact, in the month of April, 2013, they couldn’t even export one single car!

After Cyrus Mistry took over the reins of Tata, he tried to reintroduce Nano as a Smart City Car, for enticing young urban population and those with less space for parking. They even invested a fresh capital of Rs 3000 crore into this loss making product. But the results aren’t suggesting that the sale will pick up anytime soon, especially as the whole automobile sector in India is witnessing a negative growth.

What is the solution?

Branding guru Jack Trout suggests, “Kill it, shut it, forget it”.

He said, “People don’t want a ‘cheap’ car, which their neighbors can see. Especially in India, there’s a prestige there’s a prestige thing about buying a car. Tata Nano is hard to save, I would kill the brand”.

But Ratan Tata as of now is still hopeful that Nano will revive and will become the best selling Indian car in near future. No doubt his intention and ambition to provide low cost, affordable and functioning car for the mass middle class is appreciable, but the strategy he adapted to implement his dream backfired. He must realize that India is now very close to shed its ‘developing country’ mode and Indians want a class associated with anything they buy.

As of now, he plans to re-launch the car in some other country, and then bring it back to India under some other name or brand.

As he shared in the interview, “Maybe it (Nano) gets launched in another country like Indonesia, where it doesn’t have the stigma and the new image comes back to India. Or maybe as a changed product that gets marketed in Europe. There’s a lot of interest in Nano outside India.”

We hope that this latest branding technique works for Nano, and people actually embrace the idea. But for time being, it seems that Nano is still way too far from success.

What do you think of Tata Nano?

Is “cheap car” stigma affecting your decision to buy the car or some other reason is forcing you to ignore it? Please share your views right here!

"Ratan Tata Reveals The Reason Why Nano Failed!", 5 out of 5 based on 1 ratings.
  1. Dr.Ashok Kumar Mishra says

    I shall only talk to mr. Ratan Tata.I shall say my experience to him only .I shall be happy if nano shall run for years ahed .A critically ill person is not killed.All efforts are made to revive.A good physician dose this..Failure shall make one to succeed better. Nano shall again come I am hopeful.
    Dr.A.K.Mishra

  2. V Lakshmi says

    The problem is not with the car! I feel the marketing campaign of Nano was the biggest blunder ever that is where Nano failed. The company tagged Nano as ‘cheap’ in the market. In fact, Nano is the best car, unfortunately, the marketing blunders have set them back. I suggest people read on Why did Tata Nano devised for burgeoning middle classes fail? at http://www.publicdebate.in/tata-nano-devised-middle-classes-fail/

  3. BRAHAMANAND DWIVEDI says

    4 CHANGES IN THE NANO CAR WILL CREATE THE HISTORY OF SUCCESS .

    WHAT I CAN DO GIVE ME THE 2 MONTHS TIME AND LET ME TAKE THE DECISION REGARDING CAR .

    PROBLEM IS NOT IN THE CAR BUT PROBLEM IS IN ATTITUDE OF TATA MANAGEMENTS WHO IS DEAF AND DUMB TO HERE, TO FEEL, TO KNOW THE NEED OF PEOPLE ALWAYS LIVING IN ARROGANT,ARISTOCRATIC ,IGNORANT ABOUT BUYERS NEED ,BUT WANT TO IMPOSE THE PRODUCT BECAUSE IT IS FROM TATA ,

  4. BRAHAMANAND DWIVEDI says

    Good morning mr. Ratan Tata,

    I am shocked ,and very said to here your and other experts view about nano car, i am very clear that the product may be very very successful provided it should be designed according to the need of people . 4 changes in the nano car will again create the history of success ,i can do my self ,problem is not nano car but problem is in the attitude of your company who is deaf and dumb to here, to feel, to know, to decide, to initiate,to open to common people,arrogant aristocratic attitude will plunge u for wrong decision.

  5. Gowtham says

    Nano car is really a good car. Safer than auto good in comfort. But little changes as to be done : fuel tank, engine sound, wheel size. I really loved that nano twist. Superrrrrrr.

  6. K says

    One of the X-factor missing in Nano was a Level-2 factor. The Level-1 factor was a remarkable low volume of ‘initial cost’. The Level-2 refers to a low quantity of ‘recurring cost’. A middle class family may be able to afford to buy Nano, but will he be able to sustain its use through the expensive recurring costs – be it oil price or other maintenance costs. Smart home-management people do calculate monthly expenses – imagine, this recurring cost adding up to their monthly expenses ! It would be better if TATA is able to bring in the Level-3 x-factor which is innovation in technology of the car such that the technology itself can leverage low cost. Future cars SHOULD no longer rely on oil alone, but other alternate energy sources, that may begin with even a low range of car speed capability. Business strategy alone cannot improve a human civilization, but technology can.

    Frankly speaking, though it may sound weird and hilarious by some of us, I personally envision an ‘economically, spatially, … optimized car’ as remodel of Indian ‘auto’. The reason is simply that an ‘auto’ has enough space to board 3 persons at back, 1 person at front i.e. 4 persons of a family. Moreover, it’s parking space is remarkable lower, even than Nano. A disadvantage is that it does not have doors – let that be added. A low build-cost factor is absence of metal as the body cover, which may be improved accordingly. It does not take unwanted necessary space for the engine-like mechanical parts unlike in a car. The driving method does not need a manual gear, and works well with only 3-wheels that makes it a low-volume vehicle. Compared to car speed, a high speed is not attainable which is acceptable owing to normal day-to-day need, limited by the minimum value of maximum speed usually used by cars, not racing ones. Obviously, auto does not have the ‘social status’ factor. So, it needs to be remodeled by smart means – firstly, the looks should not be like ‘auto’, but a 3-wheeler racing-car ! I personally envision an ‘economically, spatially, … optimized car’ as SMART REMODEL of Indian ‘3-wheeler auto’.

  7. Hemal says

    In my opinion Tata failed in dealership. Even the previous nano before 2012 were faulty with major being starter.
    Also mileage is aroun 12 in city. Also cng retrofit is not official.
    The recent cng Xm is good but lacks attractive colours and power steering also limited Amc is given.
    In my opinion if Tata introduces cng model with all colors and power steering as well as cng retrofit in all petrol vehicles , as well as diesel version and Amc upto 100000 kms 6 years with a cost of 25000 people like me who use 2 santro I hona city and one nano will use only 4 nanos instead.

  8. Altaf Rahman says

    The whole concept of marketing is wrong.

    I still remember Tata saying what inspired him to think about a car suitable for India.
    He said when he was passing on a road, he saw a family of 3 or 4 riding a bike and the same inspired him to conceptualize a car which will give comfort to families risking their lives on bikes to switch to the safety of a 4 wheeler.
    Every thing written in media came later. When media is lapping up every tit bit of info about Nano, Tata gave them a free hand. When media wrote about Nano being cheap, Tata allowed the frenzy as it allowed free promotion. When media started comparing Nano to other cars to show how economical, Tata allowed the frenzy.
    From the start they should have stressed that it is not competing with cars but giving alternate to two wheeler. They should have allowed or directed media to compare a bike to Nano. For a few rupees more a lower idle class man can take his family out in the comfort of a car.
    They could have highlighted the milage of Nano to a bike. Instead of getting 40 kmpl on a bike they can drive safely for 25 kmpl which is slightly less.
    Instead they got carried away and deviated from initial inspiration.
    The media frenzy was such that the whole mation saw the few Nanos on fire which suggested that in order to minimize cost, Tatas compromised on safety which is against the initial inspiration. Tata wanted to give a safe ride to bike riding families but it turned out that it is a “cheap car” with out safety.
    Even now Tata can ask his marketing team to project it as an alternative to bikes to gain some market.
    It was intended for lower middle class but the Tata Marketing team pushed sales in Upper middle class and failed.
    That’s my two paisa :)

    1. Mohul Ghosh says

      Excellent observations Atlaf! Yes, the whole positioning of the brand was a big mistake, and even Ratan Tata has admitted that.. Your idea of projecting Nano as a ‘replacement’ of Two Wheeler is the thing which they need to do now.. Lets see how Tata manages its marketing now..

      Thanks for the comment!

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