Nano in a jam

Tata Motors should make a clean break with the past

The end of the road is in sight for the Tata Nano. As this newspaper reported last week, dealers in many parts of the country have stopped putting in orders for the Nano, and the production of the small hatchback at Tata Motors’ Sanand plant in Gujarat is now a paltry two vehicles a day. The plant sent out 180 Nanos in August 2017 (although it had sent 711 in the same month last year). The number of Nanos sent out went down even further in September and October – festive months in which car purchases often spike – to 124 Nanos in September and 57 in October. The famous “one-lakh-rupee” car now costs between Rs 2.25 lakh and Rs 3.2 lakh in Delhi. The company has instead found some success with its slightly larger Tiago hatchback, as well as the sedan variant of the Tiago, called the Tigor. Thanks to demand for the Tiago, the Sanand plant built for the Nano is no longer working at 20-25 per cent capacity. 

For Tata Motors to admit that its Nano experiment has failed will be difficult, since it was a brainchild of group patriarch Ratan Tata. It may not be easy to remember now, but when the Nano was announced it was widely hailed as a move of considerable genius and a landmark for Indian-style frugal engineering. It had to be sold through a lottery system, and over 200,000 bookings were registered by May 2009. Driven by expectations of record demand, Tata Motors decided to build a plant specifically for the Nano — first in West Bengal, and then in Gujarat after the Singur agitation made its first choice inhospitable. Yet the car never took off to the degree that it should have. First of all, the Rs 1 lakh price never really materialised, given the inflationary environment of the period. Then consumer interest began to dim after a few widely publicised incidents of fire. The company quickly addressed the problem, but the perception problem remained. In any case, the emphasis on the “cheap” nature of the Nano began to be revealed as a marketing mistake. Few car owners, even first-time car buyers, want their vehicle to be known as a “cheap” one; cars serve as status symbols and not just modes of transportation. 

Yet the Nano has become a millstone around Tata Motors’ neck — as well as an inconvenience for its ancillary manufacturers. It should instead focus on building a real car for India’s future — perhaps an affordable electric or hybrid vehicle. One has recently been announced, in partnership with Coimbatore-based Jayem Automotives, but Tata will not produce or develop the drive system for the Neo, as it is to be called. The company would do well to make a clean break with the past, and set a firm exit date for the Nano – a car that is already unlikely to be upgraded to meet the Bharat-VI emissions standards that will become necessary in a couple of years. What is clear is that a company simply cannot have a sentimental attachment to any one product. Tata Motors should learn this lesson and refocus its energies.