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Abu Dhabi, UAEWednesday 26 September 2018

End of the road beckons for Tata's iconic Nano 

The world's most affordable car failed to live up to the expectations of India's middle class

Tata's Nano hit the headlines for its low price tag, but rising costs and customer demands may mean its days are numbered. Indranil Mukherjee / AFP
Tata's Nano hit the headlines for its low price tag, but rising costs and customer demands may mean its days are numbered. Indranil Mukherjee / AFP

When the Tata Nano was launched in India in 2008 to great fanfare, it was touted as the people’s car: a miniature marvel that cost just 100,000 rupees (Dh5,695) and still seated four people, Tata envisaged it as the first automobile purchase for India’s vast, growing middle class.

Barely 10 years later, though, the Nano faces an imminent demise. Tata Motors dealerships have stopped placing orders for the car, and the average production at the Nano plant in Sanand, in the state of Gujarat, has dwindled to just two cars a day.

In August, the 630 sales outlets of Tata Motors across the country received 180 Nanos, compared to 711 in August 2016, according to the Business Standard newspaper. In September, that number dropped to 124, and then to just 57 in October.

The drooping fortunes of the Nano appear, on the face of it, to be a mystery. Indians now own and buy more cars than ever before. Between March 2016 and March 2017, 2.1 million cars were sold across the country—a 3.85 per cent growth over the previous year. Tata Motors alone sold nearly 173,000 of these cars.

The size of the Nano—egg-shaped, and just three metres long—also makes it a practical choice for Indian cities, where parking is often restricted and parking spots are cramped. It came in eye-catching colours as well: yellows, purples and greens that made them resemble large candies rolling about the roads.

The Nano’s failure is ultimately a story of the constraints of industry coupled with the evolving nature of consumer expectations among India’s middle class.

In the city of Indore, Nirmal Kataria, who runs a business selling plumbing fittings, bought a Nano in 2011. He was 34 at the time, and his family had never owned a car, only a succession of motorcycles and scooters.

“My father had an old Bajaj scooter, I remember, and even then, I always thought: ‘It would be so nice to get a car,’” Mr Kataria said. “You don’t get covered in dust when you drive, and in the summer, when it’s so hot outside, you don’t arrive sweating and tired if you’re in a car.”

The Nano was, at the time, the only car he could afford. He bought the base model, but found that he was paying around 145,000 rupees, significantly more than the 100,000-rupee price tag Tata Motors had advertised during the launch in 2008.

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To keep costs down, the base model had no air-conditioning, no power steering, and no power windows. Mr Kataria thought the car would have airbags, but discovered that these were missing as well. The rear hatch wasn’t designed to open, so he had to lean into the car to slip a suitcase into the boot behind the back seat.

This was not what Mr Kataria had in mind when he envisioned a car, he said. “A car means comfort,” he said. “Where was the comfort in this?” He held on to the Nano grimly for three years before selling it. Now, he said, he drives a larger hatchback made by Tata Motors. It was more expensive, and he had to take out a small loan. “But it was worth it.”

Through the years, as the costs of components and manufacturing rose, the price of the Nano escalated. The cheapest model of the car today costs around 226,000 rupees, a far cry from the its original 100,000-rupee price tag. Last year, Tata Motors, in an affidavit filed with the Bombay Stock Exchange, admitted that the Nano—once listed by the Guinness Book of World Records as the world’s cheapest car—was a loss-making product.

Santosh Desai, who heads Future Brands, a branding consultancy in New Delhi, suggests that perhaps the projected market for the Nano never existed at all.

“When you set out to do a 100,000-rupee car, it’s almost like an engineering project, not a marketing one,” Mr Desai told The National. “It was an article of faith that there would be a market for it, among people who could afford two-wheelers but not yet afford a car.”

But like Mr Kataria, people who buy a car want a car in the truest sense, with all attendant comforts, and not just the barest functionality of a car, Mr Desai said.

Cheap cars had been around in India before the Nano’s launch, he pointed out, alluding to the boxy Maruti 800 of the 1980s and 1990s, which were priced starting at 53,000 rupees. Buy the time the Nano came around, consumers wanted more than just the basics, he said. “The expectations of buyers were already set at a particular level, and the Nano fell below those expectations.”

Further, by constantly emphasising the affordability of the Nano, Tata Motors was making sure that it was only seen as a car for the not-so-well-off, rather than as a pragmatic purchase for any urban family, Mr Desai said.

Even if the Nano disappears altogether, its features have been grafted onto the Jayem Neo, an all-electric car launched last month. The Neo features an electric engine under the hood, manufactured by a Coimbatore-based company called Jayem Automotives.

But the body is that of the Nano, supplied by Tata Motors—still familiarly ovoid, still coloured like candy, still dreaming of upending the world of the automobile.

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