Is Tata Nano Salvageable?
Some of you may recall the scene in The Sound of Music, when Captain von Trapp asked Fräulein Maria to put on another dress before meeting the children, to which she replied, “But I don’t have another one. When we entered the abbey our worldly clothes were given to the poor.”
He then asked, “What about this one?” referring to the outfit she was wearing.
Maria’s answer was, “The poor didn’t want this one.”
What does Tata Nano have to do with this scene from this beloved classic musical? Well, when Tata Nano was launched in 2009, opening up the world of car ownership to citizens of a country often depicted as deprived and destitute, experts touted this as the product of the century. At only USD2500, it is the world’s cheapest car, but what the experts didn’t realise is that even the poor had pride and the term ‘cheap’ contradicts the aspirational element of owning a car. Jack Trout, an international branding guru, said, “People don’t want a ‘cheap’ car, which their neighbours can see. Especially in India, there’s a prestige thing about buying a car.”
So, just like Maria’s rags, the ‘poor’ didn’t want ‘this one’ (the Nano), even though it is considerably more affordable.
Sales never quite took off since its launch and it has been in steep decline recently. Sales have fallen to about 2500 units a month, whereas about 18 months ago, the company could still manage to move about 10 000 units a month.
Trout thinks that the damage is done, and that Tata Motors should just kill the brand. The automaker, however, is not about to give up. Ratan Tata, who stepped down as Chairman of the Tata Group last year but remains in an advisory role, has come out admitting that the company had taken the wrong branding approach, and has said that they are now hoping to relaunch the brand.
In October 2013, the Nano CNG emax, a version of the Nano that can be powered by either conventional petrol or alternative natural gas, was introduced. A diesel-powered version is slated for launch by March 2014 and there are rumours of a power steering addition, which will make it much easier to navigate the undeniably cute and compact car in bustling city traffic.
Besides these updated features and recent facelift, the automaker is also considering launching the Nano in other countries where the stigma of being cheap has not yet taken deep roots, and then bring it back to India after a bout of establishing the marque as a ‘smart city car’ instead. The location candidate of choice at the moment seems to be Indonesia. Nano did emerge as the Most Trusted Brand in India 2013, according to a report by Trust Research Advisory (TRA). So, there might be hope for Nano after all.
Luckily for Tata Motors, sales for their Jaguar Land Rover has exceeded estimates. Its second quarter net income increased by 71% to some USD564 million, generating very good cash flow for the company. Perhaps they will be channeling some of that cash to help salvage the floundering Nano.