Why the ‘World’s Cheapest Car’ Failed?

Launched in 2008 by Indian automaker Tata Motors, the world’s cheapest car produced for everyone failed to establish a mighty impact

In 2009, purchasing a car in India was considered an opulence and not every household could afford it. However, it was Mr Ratan Tata who sought to turn that situation. It happened so that in 2003, Mr Tata was travelling by road in his car when he noticed a family of four, travelling by scooter. Under the violent rainstorm, the rider was struggling to ride the scooter. For them, it was neither safe nor comfortable. That’s when Mr Tata came up with the idea of developing the world’s cheapest car, the “people’s car” analogous to Ford’s Model T or the vision of the Nazi government who ordered the establishment of Volkswagen (The People’s Car Company).

Five years later, India saw its first Tata Nano which arrived at the showroom a year later in 2009. 12 years later, the production of Tata Nano has been halted and the car has retired from the Indian automobile market. So, what precisely went awry with the Nano?

  • In the initial two years, several models of Nano caught fire because of defective wiring. For this reason, the reputation of Nano crashed down in the early years.
  • Although the car was spacious with a fuel-efficient engine, its built quality was challenged, for the company used cheap components.
  • Since the Nano was a car with a light engine, it did not carry sufficient body weight. Therefore, the car failed to offer sufficient stability at greater speeds.
  • The firm advertised the Nano as the “world’s cheapest car”. Sadly, their marketing strategy failed as Indians shunned the idea of associating themselves with a low-end car. Instead, families purchased the car that was available above the Nano in terms of costing.
  • Failing to determine the customer segment was another reason the Tata Nano failed drastically. The Nano was meant for those who could not afford cars. For this reason, Tata should’ve advertised the car exceedingly well in towns and villages. However, they never approached those regions and in the metropolitan cities, the Tata Nano could not battle because the elite wealthy families reached for the premium cars.
  • Lastly, it could not live up to its “one lakh” price-tag. When launched, Mr Tata promised that the car would carry a price-tag of INR one lakh. However, with time, the price escalated to INR 2.59 lakh. At that range, the Indian automobile market had several better offerings.

In 2019, Tata sold only one unit of Nano and in 2020, the company stopped investing in the project.

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