Tata Nano was supposed to revolutionise personal transportation in India. It was seen as a triumph of Indian engineering. Yet, the car has seen its sales figures decline year after year. Kushan Mitra finds out what went wrong with Ratan Tata’s dream venture
Before the second day of the ninth edition of the New Delhi Auto Expo in 2008, Ratan Tata, the erstwhile executive chairman of the Tata Motors, gave a series of interviews to the media. He spoke of his dream for the small car he was about to unveil within a few hours, how this small car, a marvel of ‘frugal engineering’, was going to showcase India and bring four-wheeled mobility to a whole new generation of Indians, particularly motorcycle owners.
A few hours after those interviews, Hall 11 of Pragati Maidan was packed, with journalists and camerapersons taking up every available spot, some clambered on top of Tata trucks. A lonely model showcasing a Fiat linea looked on bemused from the distance, her shiny dress showing a lot of skin not being the attraction that it otherwise would have been for photographers. There was such a scrum to get in that Tata Motors’ top executives were acting like bouncers at the gate.
Ratan Tata bestrode onto the stage as a laser show commenced. He took a dig at Osamu Suzuki, the chairman of Suzuki Motor Company — the owner of India’s largest car company Maruti Suzuki — who had publicly doubted whether a car could actually be produced at such a low price. Cue the dramatic music, the famous piece by Richard Strauss Also Sprach Zarathustra (Thus Spake Zarathustra), more famous as the opening sequence of Stanley Kubrick’s classic movie 2001: A Space Odyssey. Even though the meaning of the song was lost on most observers, Tata, as a Zoroastrian (or Parsi in Indian colloquial speak), possibly saw a divine purpose to the Nano. If the clapping was any indication, the assembled media, which had seemingly lost all sense of objectivity, bought into the divine theme.
But while the purpose for the Nano might have been divine in Tata’s eyes, the incidents that followed made many believe that the car was cursed. Tata Motor’s had broken land for a massive new factory near Singur in West Bengal. Yet, that factory and the botched land acquisition policy that the ruling left Front Government of the day followed in the State became a cause célèbre for Mamata Banerjee. The rape and murder of a young girl, Tapasi Malik, started a firestorm that few could stop, not even Ratan Tata who packed up and went off into Gujarat Chief Minister Narendra Modi’s welcoming arms.
Project Nano was delayed, yet Tata Motors engineers worked overtime to make sure the car would be ready, if not by late 2008, definitely by 2009. In an immense logistical exercise, the entire Nano factory was moved from one end of National Highway 6 to the other, 2,000 km away, but the first few Nanos came off Tata’s production line in Pantnagar, Uttarakhand, from a factory producing the Tata Ace, a runaway hit as a small commercial vehicle.
But unlike the Ace, the Nano met a tepid sales response from consumers. And worse was to come: A series of unfortunate fires caused by overheating wiring harnesses and then an issue with the fuel pump and almost daily coverage of the Nano’s failings put pressure on Tata Motors. The Nano, which had been a public relations darling for Tata Motors garnering them thousands of column centimetres and hours of air-time in India and across the world, was now an albatross around their neck in terms of public relations. And to make matters worse, the public relations diva who had coordinated the entire Nano media blitz found herself embroiled in controversy regarding leaked audio transcripts of private phone calls.
The final sales figures for 2012-13 are in, and while overall car sales declined a little, as the economic slowdown and higher interest rates put buyers off, sales of the Tata Nano dropped 27.7 per cent to 53,848 units. While that was more than the one-time darling Hyundai Santro, the Chevrolet Beat or even the heavily advertised Volkswagen Polo, the Tata Nano was outsold by many other models. Nano sales had peaked the previous year, at just under 75,000 units. Yet, despite the rosy projections at the time of the launch, the vehicle has been outsold by the second-cheapest car on the Indian market, the Maruti Suzuki Alto, four times over two years in a row.
It is not just the Alto that beat the sales of the Nano, the Alto’s stable-mates — Swift, WagonR, Dzire and Ertiga; Hyundai’s Eon, i10 and i20; Ford’s Figo and even the far more expensive Toyota Innova — beat the Nano in sales. These cars cost anywhere from Rs1 lakh to Rs15 lakh more than the Nano. A top-end Innova costs 10 times the price of a top-end Nano. While the cars are like apples and oranges in terms of their specifications and abilities, the Nano was not supposed to be so far down the pecking order.
Admittedly, it takes time for vehicles to build up sales traction; Tata’s first foray into passenger cars, the Indica, was plagued by problems in its first year. But the improved Nano 2012 model launched last year was meant to give the car a sales fillip, coupled with a new advertising campaign targeting the car at younger buyers. Yet, despite the cheap price and an aggressive advertising campaign consumers did not bite.
Part of the cause lies in the Nano itself. While the car is a remarkable achievement in terms of frugality with innovations as a hollow steering shaft, thinner plastics, a single window wiper and three screws holding the wheel, it is not such a great car to drive. Also, consumers particularly in an economy like India consider ‘prestige’ an important factor while buying a car. Surveys have shown that this factor is often just below price and fuel economy in the thought process for car buyers. And a car that was derogatorily referred to as ‘lakhtakiya’ in upcountry markets was never going to cut it on the sales front.
Plus, the Nano faced another demon — the fact that it really is not a particularly fun car to drive. Recently, your author went on a rather lengthy drive in a 2012 Nano through Kolkata and onto expressways and the rural roads inside West Bengal. While the car acquitted itself well on the highway, even managing to go relatively fast, the tiny body shell did not invoke confidence when you consider that highways are filled with far bigger products from Tata. On rural roads, the small car actually excelled, managing to go through narrow passages and deal with rough roads. But, with two adults up front and the need to carry luggage, the Nano is for all intents and purposes a two-seater. And considering that one could buy a second-hand and more spacious Maruti Alto or Hyundai Santro with around 20,000-30,000 km on the clock for the price of a new Nano, the proposition looks even harder for Tata Motors.
It is not as if Tata cannot turn around slipping sales of the Nano. However, with sales sliding across the board — sales of the Indica and the Indigo also dropping — the Nano may not be as high up the priority list as it ought to be. The car was never meant to be a money-spinner, this was something Ratan Tata wanted to leave as his legacy. However, it is the far more expensive Jaguar land Rover (JlR) division and their sales in China that has kept the company’s passenger car division afloat. The cheapest car in that line-up, the Freelander 2, costs almost 25 times as much as an entry-level Nano.
The development and launch of the Nano and the JlR purchase took place around the same time. Journalists and analysts alike believed that the latter was a bad decision and the former a smart one; they have been proved wrong on both counts. Maybe the Nano can still redeem itself, maybe one day Indians will give up their two-wheelers for this basic car. However, that day might have come and gone. Just like Ratan Tata has gone from Tata Motors.