India's Car Market Booming yet Customers Show Little Love for Tata Nano

Sometimes being cheap and cheerful just isn’t enough. Production delays, land debates and questions over occupant safety are killing the Tata Nano faster than an unexplained engine fire. India’s people car is struggling in spite of the nation’s booming car market and a low asking price of just US$2,900, half of what its nearest rival costs.

With economic growth at a staggering 9% per annum and a 22% year-to-date increase in car sales, Tata must have felt it was onto a sure thing. Things started out good, with 200,000 advanced orders for the sub-subcompact before its 2009 launch.

However, sales have been flagging these past four months with the Indian carmaker selling just 509 Nano’s in November, down from 9,000 in July.

India’s bestselling car is the US$6,200 Maruti Suzuki Alto. With a bigger engine, more spacious interior and longer track record than the Nano, many buyers prefer the Alto in spite the fact it costs more than twice as much. With 30,000 units sold in November, the numbers seems to agree. Even the US$7,800 Hyundai i10 is outselling Tata’s golden child.

Hormazd Sorabjee, editor of Autocar India, explains why the Nano is falling behind its more pricey competitors:

"The bottom of the pyramid continues to be where the action is. But the aspirations of people are moving up. People want to jump into something more substantial.”

At the time of its launch, the Nano was unavailable and dealerships and many customers were turned off by the inability to inspect / test drive the vehicle before placing an order.

It’s uncertain whether the Nano’s poor domestic sales will affect Tata’s move into foreign markets such as Europe and South America.

The four door, five seat Nano is the branchild of Tata Group Chairman Ratan Tata. His brief was for a car that cost just 100,000 rupees (US$2,200) and would appeal to those who previously could only afford a motorcycle.

However, the forced closure of one of Tata’s factories in West Bengal and the subsequent relocation caused delivery delays and the spontaneous combustion of several Nano’s in the past have dampened the Nano’s reputation.

Darius Lam, an analyst at J.D. Power & Associates, remarks on the latter:

“The company has just mishandled the whole thing. First, the company said it was no big deal. Then, it was just some foreign objects.”

Like many in the automotive community, Mr. Lam does not believe Tata has done enough to investigate the cause of the fires and reassuring the public that it’s been properly addressed.

To count the flagging sales, Tata is allowing buyers to take immediate delivery of their Nano from the showroom and opening new locations in smaller cities. The car’s warranty has been extended from 18 months to four years, while the company is stressing the Nano’s power and durability to assuage the public’s grievances.

A company insider has stated that Nano sales are back on the rise. Company spokesman Debasis Ray elaborates:

“As we began open sales, our learning was that, even though the Tata Nano is affordable for thousands of customers who do not own a car, it is still a significant decision to enter the four-wheeler category.”

It is believed that many of the Nano’s 71,000 owners are happy with their car, citing its performance, 41 mpg fuel economy and spacious interior as the main reasons for purchasing it other than the low price.

Even so, many analysts believe that unless the brand makes further strives to improve safety and public perception, the Nano will still lag behind its Korean and Japanese competitors in the Indian market.

By Tristan Hankins

Via: New York Times