Tata Nano: The Car Nobody Wanted to Be Seen In

The story

Ratan Tata, chairman of India's giant Tata Group, said he was moved by a common sight on Indian roads: whole families, sometimes four people, squeezed onto one motorbike, even in pouring monsoon rain. He wanted to build a "people's car" that those families could afford, and he publicly promised it would cost about 100,000 rupees, also called one lakh.

On January 10, 2008, at the auto show in New Delhi, Tata Motors unveiled the Nano. The price was 100,000 rupees before taxes, about $2,500 at the time, roughly half the price of India's cheapest car then. Engineers had cut costs everywhere: a small engine in the back, a top speed of about 65 miles per hour, and in the basic model no air conditioning, power steering or electric windows. Tata kept his price promise even though steel and other costs had risen during the four years of development. Newspapers around the world called it "the world's cheapest car."

Then came trouble. Tata had chosen to build the Nano factory in Singur, in the state of West Bengal, on about 997 acres of farmland the state government had acquired. Many farmers said their land had been taken unfairly, and opposition politicians led months of protests. On October 3, 2008, Tata announced it was leaving Singur. It moved production to Sanand, in the state of Gujarat, but the move delayed the car and cost money. In 2016, India's Supreme Court ruled the land acquisition illegal and ordered the land returned to its owners.

At first, demand looked strong. In April 2009 Tata took more than 203,000 bookings for the Nano in about two weeks, and deliveries began that July. But then several Nanos caught fire in 2010. Tata said the car's design was not the cause and blamed extra electrical parts fitted near the exhaust, but it extended the warranty to four years to reassure buyers. The damage to the car's image was done.

The biggest problem may have been the word "cheapest." For many families a first car is a sign of moving up in the world, and observers argued that few buyers wanted to be seen in a car known mainly for being cheap. A former auto executive told Business Today that presenting the Nano as cheap rather than innovative was "not the right brand statement." Sales peaked at about 74,500 in the 2011–2012 business year, far below the factory's capacity of tens of thousands per month. In January 2012 Ratan Tata admitted, "I don't think we were adequately ready with an advertising campaign and a dealer network." In 2015 he said that marketing the Nano as "cheap" rather than "affordable" had been a mistake.

Tata tried upgrades, including a better-equipped GenX Nano in 2015, but sales kept falling. By June 2018 the plant built just one Nano, and production soon ended. The Nano was a remarkable piece of engineering and a sincere attempt to help families. It shows that a product has to fit how customers want to feel, not just what they can afford.