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Second coming

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The new television commercial for the Nano highlights the features of the spruced-up car, billed as the Nano 2012.

A group of friends are out on a joyride in the . Amid the fun and the laughter, the commercial highlights the unique features of the car: Groovy interiors, great suspension, comfortable air-conditioning, short turning radius and neighbour’s-envy-owner’s-pride kind of mileage. The latest commercial, in a nutshell, highlights the features of the spruced up Nano, billed as the Nano 2012.

First, let’s take a look about the unique features of the Nano 2012. To begin with, the car’s 624-cc engine has been made more powerful delivering an impressive 38PS of power (as opposed to 35PS) and 51Nm of torque (in comparison to 48Nm). The car’s performance too has been upgraded, and the car has been made more fuel efficient. There are other changes for car drivers to look forward to. The ride quality has been improved with a revised suspension and a better steering mechanism. The noise-vibration-harshness levels inside the car have been attended to to reduce the noise level by a few decibels.

There are cosmetic changes too. The interiors have been spruced up, with the Nano now available in a range of 10 colours including offbeat ones like , and metallic colours such as silver and gold. The biggest draw, says the company, is that the car will wear the same price tag: starting at Rs 1.4 lakh (ex-showroom Delhi).

In terms of communication too, the company has learnt its lessons. At the time of launch it relied heavily on social media to build hype around the car. The brand undertook a course correction last year when it launched a campaign titled “Key to your happiness”. This was meant to appeal to middle class families in small towns, which may have been overlooked in the earlier communication.

This time around, while extending the key to happiness theme, the brand has chosen to engage a much younger audience group. This is a step away from the family setting or a newly married couple which was the focus in the earlier commercials. In short, even before the brand celebrates its second anniversary, the company has tweaked three (product, promotion, place, while price remains the same since its increase earlier this year) of the 4Ps of its marketing. Will all these moves make an impact?

Shifting gears
This is not the first time the Nano is making changes to the car. Last year, the company had made changes in the exhaust and electrical systems, besides providing a four-year warranty. But these were small changes, prompted to an extent by bad press post a series of unforeseen fire incidents, making buyers distrustful of the car’s safety features. According to observers, as many as 30,000 of the 1 lakh initial bookings were cancelled after the fire incidents were reported.

Unfortunately, since launch, luck has not been on Tata Nano's side. Even before the car was unveiled, problems relating to setting up of the plant, which in turn hit the company’s production capacity, meant the Tata Nano did not live up to its expectations. The production for the small car was hit when the agitation over compensation to the land owners forced the company to shut the Singur (West Bengal) plant, running on a temporary arrangement at Pantnagar (Uttarakhand) before moving on to Sanand (Gujarat) in mid-2010. All this led to supply constraints which meant no open sales but sales only through advance bookings. Advance bookings as a concept did not find favour among the target audience and the extended waiting time meant many car buyers lost interest in the much hyped cheapest car in the world. More importantly, the Nano was not a Rs 1 lakh car after all. The base model wore a price tag of Rs 1.2 lakh (ex-showroom Delhi), at launch which was increased to Rs 1.40 lakhs in April 2011.

Unlike the previous attempt, the recent changes seem to be an outcome of the car’s flagging fortunes. As data from Society of Indian Automobile Manufacturers (), the apex industry body, shows, over the last few months the sales of the Nano have been on a downward slide. From 8,707 units in March this year and then 10,012 in April, sales have come down to 3,868 in October 2011. Sales did jump back to 6,401 units in November, but it is nowhere near the 20,000-units-per-month (average) target Tata Motors had set for itself at launch.

Some analysts say they would not read too much into the brand’s fluctuating sales. The recent drop in sales is not reflective of the true potential of the car, rather an indication of the macro-economic environment in the country. As an auto analyst at a leading brokerage firm in Mumbai explains, “Given the rising interest rates and inflation, there is not much money in the market. This means small car buyers are affected the most as this is the class that take a loan/borrow to purchase a car.” Remember purchasing a car in India is an emotional decision — and a protracted one at that — and many would postpone purchase in an uncertain environment.

Others remain skeptical. “I do not have much hope from these changes and it will not substantially impact volumes,” says , vice-president, PINC Research. “The major issue is that the car is quite small for even a first-time buyer. It also lacks boot space, has an underpowered engine and is not value for money. Consumers would rather pay an extra amount to buy the Maruti Alto which is not just a safe bet but also a best-seller in its segment.”

Add to that the rash of new cars in the segment-be it Honda (Brio) or Hyundai (Eon), most manufacturers are looking at the segment with renewed interest. While has announced plans to launch a range of sub-800 cc cars, there is buzz that Fiat and Honda are working on smaller cars/diesel versions of existing cars. Flagging car sales also remain an area of concern. A series of increases in the interest rates and petrol prices have systematically hit the demand for cars, and the SIAM data shows car sales continued to slide for the fifth straight month in November.

Brandscapes Worldwide Chairman and Managing Director Pranesh Misra is unsure whether the imagery will click with audiences in the heartland markets and the upwardly mobile middle-class consumer. “For a car that aspires to be the biggest driver at the bottom of the pyramid, I believe they are pitching it too low in terms of age,” he says. If it is meant for the young consumer which is at the cross-hairs of every consumer marketing firm today, the ad will win a lot of appreciation but the product will get repositioned as frivolous and light weight.

But Tata Motors is not leaving any stone unturned to ensure the car lives up to its promise. The company is stepping up distribution with vigour. Besides the 676 regular sales outlets, the company opened 210 Nano Access Points across the country for consumers to experience the car. For purchase, they would be directed to an adjacent dealership. “We are establishing exclusive dealerships for the Nano in towns with population of 2 lakh. Sixty such dealerships will facilitate sales and after-sales service,” says a Tata Motors spokesperson. In fact, there would be dealerships that will sell nothing but the Nano. Indeed, the rush to launch tier-3 and tier-4 specific dealerships exclusively for the Nano is the pivot in the entire revival effort.

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