In 2008, I was in Heidelberg, Germany during the Tata Nano launching, some of my European friends were curious about this small car. There was much buzz about Indians had invented a small car which cost just around 2000 Euros (around 1 lakh INR at then exchange rate), we would love to own the car if it is launched here, responded both of them. Even most of European players hinted at Nano capturing major market share, mainly based on assumptions at primary information. However some of my friends at the R&D department of BMW in Munich had expressed their doubts about safety parameter of vehicles.
Back home, Nano was receiving a tremendous response. At Auto-Expos the Tata stall was often over crowded, as people rush into to get a view of this car. Tata Nano was a great concept which fulfills many middle class dream to have cars mainly due to the factor that comes inexpensive and fits well in their budget. The concept was mainly based on product position and gap analysis. Somehow, some major parameters of buying cars has not been considered as it was supposed to.
At the same time, the Indian Two wheelers industry was also put under pressure due the response Nano was getting at the time and boardrooms were full of discussion about Nano. These responses prompt other OEMs to announced entry into the small car segment.
A keen observation on how Nano’s journey started and where it stands now put forth a lot of questions. In the last 5 years Tata Motor had taken each and every possible efforts to promote this product via big advertising campaigns as an attempt to create new target segment etc. But the ROI remains sluggish and now Nano could be well seen as a declining product. There difference of 1 lakhs rupees has increased for Nano price since its initial launch, an increase of around 100%. The product concept, competition and product position has all been completely changed since its initial launch. ACG also keep eye on this issue and after 2 years extensive study by ACG team; released the premium report “Tata Nano – Unveiling a Success Strategy”.
The 'Tata Nano' Concept
Tata Nano has been often labeled as ‘Cheap Car’ by buyers which itself is a big set-back. The attempts to compete against Two Wheelers didn't pay off since the advantages customers find in two wheelers were much more superior. Eventually pricing also became the villain as the low-end version starts at 1,5 lakhs ex-show room price; customers would prefer Maruti Alto or similar models which is just priced at Rs. 40,000 more than Nano.
Product portfolio:
Tata Nano is currently available in Petrol and CNG versions.
Three variants are available for petrol version, price starting at Rs. 1,50,00 which fall across Rs. 2,23,500 for top end model.
CNG models are available in two versions starting at Rs 2,40,145 and Rs. 2,65,260.
Exchange offer: Nano Exchange Offer (On select models only)
In one of the recent attempts to boost sales Tata introduced exchange offer for New Nano by exchanging their two wheelers.
Tata Nano sales analysis:
Nano could not performed on its defined parameters as expected; even after promoting heavily on print, Digital and Electronic media.
The Verdict
The concept that lead to the evolution of Nano is good, but somehow it is evident that proper analysis on ground level was completely missing. Concepts merely based on product gap often doesn’t work. All parameters should be consider before launching. Even cultural facts on target groups should be analyzed.
On the contrary, in Europe BMW Mini and Mercedes Smart are successful products because it fits in well with their individual life style or small family size. A ‘show-off-culture’ is mostly absent in the community and more emphasize is given to comfortable driving with no parking issue. Since products belonging to small car segment gain good brand reputation.
In India, majority of the families are around 4 to 5 members for which this car does not suit. People like to have bigger cars just like in USA. Also people like to drive impressive expensive cars.
What next:
ACG found that Nano needs to change its segment, product perception and pricing. Instead of competitive with two wheeler segment, it shall enter into small car segment. The definition of Small car segment is different than small cheap car segment. There is good potential growth in the small car segment.
With re-launch and and re-branding, Tata could make Nano successful in this segment. ACG has done a detailed study on the prospects. The analysis “Tata Nano – Unveiling a Success Strategy” is now available for purchase.
Hi Arun,
Good brief on Nano in your blog. I was also curious as well as eager to read the report analysis ” “Tata Nano – Unveiling a Success Strategy””. When I downloaded the file through the link provided, it surprised me with only first page ( cover page ) with a nano and traffic light image and second page about ACG. Was this intentional or an error while uploading the file? Can you please share the analysis?
Thanks and regards,
Sanjeev
PS : The graphs may need a re-look. The Nano sale analysis ( scale on left side indicate ~3.5 Milion. Nanos expected sales for 2012-2013. Tata Motors, at least as I know never expected or were prepared for such a number. Similarly, the small care sales – graph does not have values in x axis ( year-wise projections). Can you verify and reload to avoid any misrepresentation.
Hi Sanjeev,
The projection is as per experts view.
Full reports are ACG Premium Service.
Regrads,
Arun
Dear Arun,
You have opened a beehive of thoughts in my mind through your article. I was involved in the development of this car and have a couple of patents too associated with the innovations used in the car.
I also share your experience of a lot of curious German friends who time and again asked me about the details of the car. A few of them were lucky to get a ride. I also gave a ride to a few American friends as I own one TATA Nano. All were quite appreciative of the design, architecture and simplicity (minimalism) of the car. I too felt bad when I heard it was not selling to the expected volumes. But may your words come true and let this marvel see better days which it certainly deserves apart from the hype it received.
Regards,
Shrinivas Sharangpani
Retired as Assistant General Manager (Learning Centre)
Tata Motors Ltd
lot of material for analysis as WHY???
Gentlemen,
This is all good.
What remain to be answered is why the target buyers do not prefer to uh the Nano?
And this is not being said.
Analysis if delivers the desired results , it is appreciated. Else, it does not solve the problem.
Unless and until, the buyers’ points not buying the Nano is understood, where the strategy can be Focussed?
Installed capacity versus its utlisatiin make one to weep. No break even and hence no further product upgrade to keep in competition.
Once the economy takes shape and buyers prefer to buy more, the competition might have moves ahead to keep in synch with the time.
So FY 2020 remain a distant dream for Indian auto product designs! keep aside the Nano. What is happening to Indica and Indica vista ? It speaks the same story.
Good article.
Analysis highlighted the issues- choosing segment, indian family requirement and sentiment, and also price v/s product FAB. NANO can be fit in small car segment but need to re-design the front look.
One upcoming segment is Quadra cycle where Nano will be play significant role spacially in metro city with CNG version. But in this segment price and OPECO are bottle neck for Nano.
“good..lets have hope ”
Arun,
Good analysis overall. Small point of contention – Smart cannot be called a successful brand. It has been a perpetual money drain for Mercedes. Owners hate the car a over priced, bumpy and underpowered.
Head – Marketing Services & Product Planning,
PCBU – International Business,
Regional Head Europe at Tata Motors
“Innovation should be encouraged & continue the journey towards success”
Sharad Srivastava
Head Marketing & Business Development
Munjal Auto Industries Limited, (Hero Group),
Munjal Auto Industries Limited
“A comeback would be a marketing dream. But looking at the market conditions and the focus of TML, this seems difficult. ”
Vishal Thakkar
“Comeback Kings…..I feel that’s stretching it a bit too far, given all the pros and cons.”
Mukul Trehan
An FCA with 17+ years of experience in the field of Business Assurance at Senior Management level in India and Abroad
Excellent & informative article.
The concept of two wheeler exchange for the 4 wheeler is excellent.
Parag Deore
Dy Manager at Mahindra & Mahindra Ltd.
Nice article!
TUSHAR CHAVAN
Manager at Tata Motors
THANKS FOR THE ARTICLE!
INTERESTING
Karthic Balasubramaniyan
Head – Marketing & Sales ( Automotive Division ) at Witzenmann India
just keep on share…
I am a huge fan of cars/bikes………
Sunny Khurana
Senior Engineer at Sata Vikas India Pvt. Ltd
Once a perception is built it takes eons of time to clear the belief. some experts have said Brand Nano should be killed.
Saket Mulaokar
Manager – M&M Ltd, Automotive Sector
Really a well written article. I feel the initial marketing that was done tagging it as “Lakhtakiya” was entirely wrong and didn’t fit in the time frame it was launched. If instead of launching it in that way, it was launched like BMW mini or Mercedes Smart (a Car catering to Individuals, solution to parking issues and Fuel Efficiency), may be TATA Nano would have been a success.
Aditya Gupta
President,
Mechanical Engg Association, NIT-Bhopal
Good article, About Nano not picking market as expected, i feel the target customers were assumed in general which was definately not smooth. Not all two wheeler middle class family aspire a cheap car. “Cheap car” concept seems to put off lot of customers only because nobody wants to buy a 4 wheeler publicised as a cheap product for those who can only afford a little more than a 2 wheeler only. A car for any Indian family has attached with it lot of social considerations apart from its technical specs and cost.
Excellent article Arun; you have given lots of insight. Tata Motors has always fought back and tasted success in difficult times in the past.
TATA NANO is beyond doubt, one of the MILSTONE in the automobile History alongwith brough proud for Indian Automobile Industry;
Its success cant be limited to Results in Numbers rather NANO can always be emerged as winner for its engineering excellence, its design and the capability of indegineous team to roll out the Indian Concept car within the record time etc etc…..
So far as Numbers is concerned, it needs to exceed its reach in a tremendous scale to provide accessibility to the potential byers/users in the remote and PAN India basis; which requires to evolve entirely different strategy to place the product in the Market with entirely different supply chain, all aloof from the present channel to explore the huge potential in the Market. This product still having tremendous potential to do wonders and bring sustainability to all the concerned, singlehandedly ( only one single product).
Ratan Tata talks about probable “mistakes” and possible remedies in the “Nano” project
Yes, I had actually read – and also shared with many others – your insightful article. Thanks for that! It is therefore a pleasure to see Ratan Tata himself talking along those lines. There can be no better affirmation for your theses, I believe. Congratulations.
Awesome post.
very difficult unless they come up with a premium version and create a niche market like the beetle. whose normal material cost should be around tata nanos.
Lenin d’souza
Dy General Manager
Mahindra & Mahindra