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The Tata Nano Failure Story
INTRODUCTION
Tata Motors, one of the most successful automobiles manufacturer in India
launched Tata Nano in March 2009 . It was called world’s cheapest car .
The idea of designing this car came to Ratan Tata when he was travelling on a
rainy day and saw a family of 4 travelling in a bike and facing difficulties in
travelling. He thought of designing a car which can be affordable by middle
class people costing approximately at the same rates of bikes. It was aimed at
middle class Indians who primarily derived on motorcycles and scooties and
dreamed to own a car.
When Tata Nano was launched it won many international awards
based on its defining features. It had a high fuel efficiency, low
weight. It was designed to incorporate all international regulations
which was applicable then and having the lowest emission level
amongst all cars made in India and it was offered at the cheapest
price in the world. The quality was good. It also had an attention
seeking potential. Many media agencies, newspapers, TV news
headlines across the world called it “The People’s Car”.
Reasons for Failure
Despite of having these features and was a affordable car, it failed in Indian market.
There were many reasons that it failed in Indian market. Some of the reasons are:
1. It got branded as the world’s cheapest car
In starting, the price attracted the customers . But in countries like India, the car is a
symbol of their status, aspirational symbol and no one wanted to buy such a cheap
car. As it got branded as the world’s cheapest car, this made people feel that it was
fragile and unreliable. Therefore the word cheap in its branding prevented the people
to buy the car. Price of the car was the strength but the positioning was weekness.
2. Singur Controvercy
There was a political conflict and it had to shift their plant from Singur, West Bengal
to Gujrat which caused delayed in the production of car for about almost 18 months.
Due to this the price of the car also increased by 20% to 50%. So, people thaught
instead of buying Tata Nano they would rather go for second hand car like Alto etc. as
those car would represent their status at the same price of Tata Nano.
3. The looks of the car
It looked like blown up match box the revised version of (replica of ) an auto
which looked like a mouse so the cheap price of the car also did not attract the
customers.
4. Negative Publicity
Since the Tata Nano was so much in the news, it also attracted controversies.
There were few cars 2 in a 2-3million which were found defective . It caught
fire in the first 2 years due to defective engines or some parts of the car was
defective. Tata motors did rectify the glitches and also gave owners extended
warranty for new cars and existing cars but in the first 2 years all those cars
catching fire, the reputation damage was done quite too initially into the
launch of Tata Nano and the company couldn't generate positive rebuttal.
5. Engineering and Design
It did not have some basic features as ; no ABS ,uncomfortable ride,
overloading problem and poor acceleration. Engine was so small that it didn’t
work as nice as bike.
6. Increasing Competition with second hand car market and bikes
manufacturing market
Better looks, features, performance and importantly status symbol cars was
offered in the same price of Nano. So, were interested to buy second hand
cars instead of Nano. It had competition with bikes also but couldn’t compete
due to engineering and design threat and its looks. The bikes engine were far
better than Nano and people such as youngsters has a mind set that riding in a
bikes looked smart and dashing.
CONCLUSION
Tata Nano was unsuccessful in creating Value Proposition;
1. Emotional Value
Since Tata Nano was branded as the cheapest car, it did not satisfy the
emotional value of customers as it was not a symbol of aspiration, and
was not a luxury item .
2. Financial Value
Tata Nano did not satisfy the financial value of customers due to the
increase in price of the car by 20%- 50% because of shifting of the
production plant/factory. Since car is the status of symbol in India
Emotional value > Financial Value, in first few years low price also did
not attract customers
3. Performance Value
Nano did not fulfil the performance value of the customers as it had less
features, slightly low quality , was not stylish and fashionable and couldn’t give
expected performance level.
4. Relational Value
Relational value of the customers were also not satisfied as there was delay in
production and delivery of the car. Relational value involves customization,
fast delivery, speed, achieve timeline, extra service feature, rapid response
which they couldn’t fulfil.
Hence it failed in the Indian Market.
