Why the World’s Cheapest Car Flopped

Tuesday, October 15, 2013

MUMBAI—When the Tata Nano, a stripped-down minicar priced at around $2,000, was introduced in 2009, it was marketed as a car that would transform the way aspiring consumers in India and other developing countries got around.

But the low-cost automotive revolution fizzled. Selling poorly at home and with exports drying up, the Nano has become a cautionary tale of misplaced ambitions and a drag on sales and profit at Tata Motors Ltd, India’s fourth-largest auto maker and the owner of Jaguar and Land Rover luxury vehicles.

It turns out that those climbing into India’s middle class want cheap cars, but they don’t want cars that seem cheap—and are willing to pay more than Tata reckoned for a vehicle that has a more upmarket image.

Now, Nano is trying remake the “people’s car,” into the “cool people’s car.” It has given the car itself a face-lift, adding a stereo, hubcaps and chrome trim, raised the price and started a new marketing campaign to give it more cachet.

Source: Wall Street Journal (subscription required) (link opens in a new window)

Tags
consumer products, transportation