It seemed such a good idea at the time. Four years ago, to much ballyhoo, India's Tata Motors launched the Nano, billing it as “the world's cheapest car”. At $2,100, the baby car certainly was cheap, and that, as it turned out, was the problem. An immense amount of engineering and design effort had been poured into producing the Nano. The trouble was that the marketing department had not been as industrious. To be fair, it was probably not the marketing men who dreamt up the idea of producing the ultimate affordable car. Either way, the fundamental error was to assume that to produce a serviceable private vehicle at a rock bottom price, would cause India's aspirant lower middle-classes to pour into the Nano showrooms. A $500 million new Tata plant was poised to produce the cars by the tens of thousands. In the event, the Nano has proved a resounding flop. It is not that its performance on the road was sluggish, to put it mildly, nor that the original models were thoroughly basic, that kept buyers away. It is now clear that what really put them off the Nano was its very cheapness. What Tata's product planners had forgotten is that for the vast majority of private motorists, the automobile is an aspirational purchase. New car salesmen around the world have learnt that more often than not, they are able to “sell up” a committed purchaser to a more expensive model. The psychology is that if people have already decided to spend a significant amount of cash on an automobile, adding a few hundred dollars to the purchase, turns out to be neither here nor there. The problem with the Nano was that, however much Indians may have dreamt of owning their own vehicle, their dreams had never envisaged that it would be so thoroughly basic as “the world's cheapest car”. This is not to say that Tata might not have eventually sold millions of Nanos, if they had, from the outset, offered a real range of more expensive model options, to which a buyer could trade up, if only in his or her dreams. Instead Nano ownership, for the relative handful of the market that actually bought the car, became something of badge of either poverty or stinginess. There was no real chance to show off “customization” by pointing to “Go-Faster” wheels or extra trim or dashboard instrumentation. The Nano was what it was, boring, uninspiring and — oddly — depressingly cheap. For too many of its target audience, Tata's much-hyped Nano became a No-No. It did not help of course that by the time the first of these little cars rolled off the production line, the global recession was starting to bite. Yet in those circumstances, it might have been imagined that a low-cost automobile would actually find a readier market, as people abandoned their more expensive vehicles. Unfortunately that was not how it worked out. Only belatedly is Tata now expanding the range to include the higher-priced options, in a hope to win back lost domestic market share from the competition. In the opinion of some analysts, this may be easier said than done. Producing the world's cheapest cars may turn out to have been one of Tata's greatest mistakes.
