The world's cheapest car, the Tata Nano, fell victim to its own game, considered by consumers as too cheap and simplistic.
The Tata Nano is one of the most controversial production models ever. 2008 was the year when the Tata Nano was presented. The world was in the midst of an economic and oil crisis. The price of a barrel of oil surpassed the psychological barrier of 100 dollars and even went over 150 dollars per barrel, something hitherto unthinkable in a scenario of world peace.
In this stir, Tata Industries then announced the Tata Nano, the car that promised to put millions of Indians on four wheels. Alarms sounded in developed countries. What would the price of oil be like if millions of Indians suddenly started driving? A car with a price below 2500 usd.
Criticism came from all quarters. From the ecologists because the car was too polluting, from the international institutions because it was unsafe, from the manufacturers because it was unfair competition. Anyway, everyone had a stone always at hand to throw at little Nano. But regardless of these valuations, who had the last word were the consumers. And the car that promised to be the alternative for millions of families to scooters and motorbikes never came to be.
It was in no man's land: the poorest don't look at it as a real car and the more affluent don't see it as an alternative to "normal" cars.
In five years Tata only sold 230,000 units when the factory was designed to build 250,000 units per year. Tata's management has already come to recognize that product positioning and marketing has failed. And because of that, the next Tata will be a little more expensive and a little more luxurious. Enough to be taken seriously. A case for saying that “cheap is expensive”!
Text: Guilherme Ferreira da Costa