Ratan Tata wanted to repeat what Harrison Ford did a hundred years back, but followed an absolutely different road. Ford went the natural way: produced normal cars and sold at profitable prices, increased the volume of production as well as reduced the cost of production in steps, and sold newer and newer versions in lesser and lesser prices, and yes, he did create history. But Tata went at it the other way round. He yelled out at the very beginning that he was going to make the lowest priced car in India; designed one from scratch for the purpose; set up a whole new production facility; and failed badly in the execution.
The vision.
Nano was aimed at a new lower cost price segment in the Indian car market. Tata aimed to create a space between the lowest priced Maruti 800 (about 2.5 lakhs at that time) and the executive-commuter motor-cycle segment priced at Rs 65000. So if you launched a car at just above rupees one lakh, say at 1.25 lakhs, it could tempt the bike aspirants into buying a car. Maybe you can also eat into part of the market share of Maruti 800 too. Tata had plans in mind to eventually reduce the price to 1 lakh, like what Ford did hundred years back in America.
The set back.
But what spoiled the whole plan was the set back at Singur when Tata was forced to pull back after a huge investment of about 1500 crores. Even a giant like Tata would be hurt if 1500 crores is compromised. And that was what happened. Tata, even though moved the factory to Gujarat, was forced to increase the price tag of Nano, and that was what caused the failure of Nano. Because the only advantage Nano had against it competitors was its price tag, and that exactly was where Tata lost.
Even at 1.75 - 2.25, Nano is still the lowest priced car in the Indian market. But to compete with a proven Maruti 800 at 2.5 lakhs, this price tag was not enough. You can better go for a used Maruti 800 at the price of Nano. And exactly at this kind of a weighing is some of the cost cutting aspects in Nano matters against the proven fidelity of Maruti 800:
After the huge investment in designing a new car from scratch, building all the dies and all, signing contracts with component suppliers, Tata can't abandon Nano anyway. So what they would aim now is to sell as much Nano as possible. Eventually when the loss is overcome, they would try to reduce the price in steps. And this is exactly what the media wont tell you. Because this news will again reduce the sales of the car. In the meantime Tata is trying to sell a modified version in Europe. But they can use only the platform and the overall design. Even the body panels cannot be used these because of stringent security requirements.
Please note that this is not a hate campaign against Nano. What the Fifth Estate attempts is only an academic analysis of the issue. But more than that the focus of The Fifth Estate is in speaking out what the media (the fourth estate) would suppress owing to commercial pressures.
The vision.
Nano was aimed at a new lower cost price segment in the Indian car market. Tata aimed to create a space between the lowest priced Maruti 800 (about 2.5 lakhs at that time) and the executive-commuter motor-cycle segment priced at Rs 65000. So if you launched a car at just above rupees one lakh, say at 1.25 lakhs, it could tempt the bike aspirants into buying a car. Maybe you can also eat into part of the market share of Maruti 800 too. Tata had plans in mind to eventually reduce the price to 1 lakh, like what Ford did hundred years back in America.
The set back.
But what spoiled the whole plan was the set back at Singur when Tata was forced to pull back after a huge investment of about 1500 crores. Even a giant like Tata would be hurt if 1500 crores is compromised. And that was what happened. Tata, even though moved the factory to Gujarat, was forced to increase the price tag of Nano, and that was what caused the failure of Nano. Because the only advantage Nano had against it competitors was its price tag, and that exactly was where Tata lost.
Even at 1.75 - 2.25, Nano is still the lowest priced car in the Indian market. But to compete with a proven Maruti 800 at 2.5 lakhs, this price tag was not enough. You can better go for a used Maruti 800 at the price of Nano. And exactly at this kind of a weighing is some of the cost cutting aspects in Nano matters against the proven fidelity of Maruti 800:
- Gradeability (on an uphill drive): With the shortest wheel base, elevated centre of gravity due to a tall boy design, and adding to all these, the engine placed in the rear (for a less complex and hence cheaper transmission) concentrating the weight on the rear, raised a concern of safe gradeability on an uphill drive. Tata addressed this specifically is the post launch ads.
- Power (for highways): A family car in India should be able to ride on the highways as well. Because more than as a daily vehicle, cars in India are family carriers used for occassional long distance trips. The 624cc engine raises concerns of inadequate power for four passengers over a highway. The transmission too is only 4 speed. This is a major issue addressed in recent Nano ads.
- Safety (Fire): An engine housed under the rear seat with the radiator vent facing backward allowing only a lesser air intake, and hence lesser cooling, along with more plastic/polymer elements (part of the cost cutting as well as weight reducing measures) in the inner panels, caused serious safety concerns even before the launch. After a few fire incidents were reported, Tata made modifications for fire safety in the newer versions.
- Safety (Impact): The body panels of the Nano are of low weight, aiming at a low overall weight to cope with the low power of the engine and a high mileage requirement in the market. This cause concerns of passenger safety during an impact/collision.
After the huge investment in designing a new car from scratch, building all the dies and all, signing contracts with component suppliers, Tata can't abandon Nano anyway. So what they would aim now is to sell as much Nano as possible. Eventually when the loss is overcome, they would try to reduce the price in steps. And this is exactly what the media wont tell you. Because this news will again reduce the sales of the car. In the meantime Tata is trying to sell a modified version in Europe. But they can use only the platform and the overall design. Even the body panels cannot be used these because of stringent security requirements.
Please note that this is not a hate campaign against Nano. What the Fifth Estate attempts is only an academic analysis of the issue. But more than that the focus of The Fifth Estate is in speaking out what the media (the fourth estate) would suppress owing to commercial pressures.
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