Tata has recently launched the 2012 Edition of the Nano. But as sales continue to sag and customer confidence wears thin, will the facelift really change much for India’s wonder car?
During the run up to its launch and all the hype that surrounded it, the Tata Nano, with its $2,500 price tag, was touted as a dream come true for the common man. It was also a great moment for Ratan Tata personally, who came upon the idea when he saw a family of four riding a scooter in the rain. However, as the events unfolded – right from the political debacle at Singur, West Bengal to the low & erratic sales numbers to the rising component prices to the cases of burning cars – it became clearer to one and all that the car was following a strategy, which Dr. Michael Porter calls ‘stuck in the middle’ – a place where a product is stuck unsure of the positioning it wishes to follow.
We call it the devil and the deep sea issue. The rich man doesn’t want it; the poor man can’t afford it. After adding a bouquet of features to the world’s cheapest car, Tata Motors assumed that it would enjoy a cult-like status in the market – the kind Apple has.
It seemed a given when customers started flocking to showrooms when the Nano bookings opened in 2009. In fact, customers had to buy application forms and only a few lucky ones got their dream car. However, when a car comes that cheap, it has to justify its existence in a product portfolio with far greater numbers. Consider the higher priced Eon, launched by Hyundai Motor Company in October 2011 to primarily compete with Maruti Suzuki Alto. By November 5, the company had already completed over 9,000 bookings! The cheaper Nano sold only 3,868 units in October 2011.
What is more astonishing is the fact that despite reducing production, sales of Nano have been considerably low compared to last year. The production of Tata Nano in April-October 2010 was 40,492 units, which dropped to 34,068 units this year. Similarly, Nano recorded sales of 40,467 units in April-October 2010, much more impressive as compared to this year’s figure at just 33,245 units.
The latest ploy from Tata to rev up the sales is the Tata Nano 2012 edition. It has been launched in three variants – standard, CX and LX. Besides minor modifications with the external design and classier interiors, the car is being powered by a 624 cc and 38 bhp engine and tubeless tyres for a smooth drive and offering it at just about the same prices. The new edition also promises additional promotional offers with a Rs.15,000 cash down payment and discounts on all variants with extended warranty schemes. But will this facelift really be able to do to the Nano what the original product could not?
More than anything else, the Nano project has suffered the burden of flawed assumptions. It was assumed that two wheeler owners will upgrade readily to the Nano. The mistake was, perhaps, in the positioning space that Nano straddled. All advertisements of Nano at that time portrayed the non-rich family – one Nano advertisement even showed the family living in a place similar to a village. This immediately alienated the upwardly mobile city middle class which perchance are the largest segment for car sales. The Nano became, and perhaps still is perceived as, a poor man’s car. Playing on the Rs. 1 lakh pricing tag line too gave a dent to Nano that was unexpected. Consider a family in the present scenario buying a new residential accommodation in a high rise, where the parking lot is sold separately. So to park a Tata Nano, which costs around Rs.1.24 lakh, the customer would have to pay around Rs.2.5-3 lakh for the parking lot.
For more articles, Click on IIPM Article
Source : IIPM Editorial, 2011.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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During the run up to its launch and all the hype that surrounded it, the Tata Nano, with its $2,500 price tag, was touted as a dream come true for the common man. It was also a great moment for Ratan Tata personally, who came upon the idea when he saw a family of four riding a scooter in the rain. However, as the events unfolded – right from the political debacle at Singur, West Bengal to the low & erratic sales numbers to the rising component prices to the cases of burning cars – it became clearer to one and all that the car was following a strategy, which Dr. Michael Porter calls ‘stuck in the middle’ – a place where a product is stuck unsure of the positioning it wishes to follow.
We call it the devil and the deep sea issue. The rich man doesn’t want it; the poor man can’t afford it. After adding a bouquet of features to the world’s cheapest car, Tata Motors assumed that it would enjoy a cult-like status in the market – the kind Apple has.
It seemed a given when customers started flocking to showrooms when the Nano bookings opened in 2009. In fact, customers had to buy application forms and only a few lucky ones got their dream car. However, when a car comes that cheap, it has to justify its existence in a product portfolio with far greater numbers. Consider the higher priced Eon, launched by Hyundai Motor Company in October 2011 to primarily compete with Maruti Suzuki Alto. By November 5, the company had already completed over 9,000 bookings! The cheaper Nano sold only 3,868 units in October 2011.
What is more astonishing is the fact that despite reducing production, sales of Nano have been considerably low compared to last year. The production of Tata Nano in April-October 2010 was 40,492 units, which dropped to 34,068 units this year. Similarly, Nano recorded sales of 40,467 units in April-October 2010, much more impressive as compared to this year’s figure at just 33,245 units.
The latest ploy from Tata to rev up the sales is the Tata Nano 2012 edition. It has been launched in three variants – standard, CX and LX. Besides minor modifications with the external design and classier interiors, the car is being powered by a 624 cc and 38 bhp engine and tubeless tyres for a smooth drive and offering it at just about the same prices. The new edition also promises additional promotional offers with a Rs.15,000 cash down payment and discounts on all variants with extended warranty schemes. But will this facelift really be able to do to the Nano what the original product could not?
More than anything else, the Nano project has suffered the burden of flawed assumptions. It was assumed that two wheeler owners will upgrade readily to the Nano. The mistake was, perhaps, in the positioning space that Nano straddled. All advertisements of Nano at that time portrayed the non-rich family – one Nano advertisement even showed the family living in a place similar to a village. This immediately alienated the upwardly mobile city middle class which perchance are the largest segment for car sales. The Nano became, and perhaps still is perceived as, a poor man’s car. Playing on the Rs. 1 lakh pricing tag line too gave a dent to Nano that was unexpected. Consider a family in the present scenario buying a new residential accommodation in a high rise, where the parking lot is sold separately. So to park a Tata Nano, which costs around Rs.1.24 lakh, the customer would have to pay around Rs.2.5-3 lakh for the parking lot.
For more articles, Click on IIPM Article
Source : IIPM Editorial, 2011.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Proves Its Mettle Once Again.....
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM RANKED NO.1 in MAIL TODAY B-SCHOOL RANKINGS
Planman Technologies
