Tata Nano – What went wrong?
Tata Nano What went wrong?
Tata Nano What went wrong?
With the launch of Tata Nano in March 2009, it was evident that the Nano will be future of small cars in India. At a price of INR 1, 00,000 Tata presented "People's Car" with features like good fuel efficiency, rear positioned engine, eco-friendly, stylish look etc. The car received quick recognition from Indian families who could not afford a four wheeler earlier. By May, 2009 approximately 203,000 people had placed orders for a Nano. But in 2010, the sale of the car has seen a sequential fall. In July2010, Tata motors sold 9000 units of Nano, which fell to 8,103 units in August, 5,520 units in September and only 3,065 units in October. In November, which is a festival month and when it is considered auspicious to buy new and big ticket items, the sale of Nano came down to just 509 units, even when theoverall sales for Indian auto sector rose by 45% in October 2010. This resulted in the Tata motor's overall domestic sales in the passenger vehicle segment fell by 25% to 15,340 units from 20,706 units in the previous year. Even high segment cars like Mercedes sold more than 500 units in the festive month.
The main reasons attributed to the consistent fall in the sales of Nano Cars are multiple fire incidents across India, increasing prices of the car and difficulty in obtaining the loan from the banks. Right from the launch of the Nano, there have been various cases of Nano catching fire. The number of such incidents rose to six in August 2010. Experts are blaming it on faulty cabling system which results in short circuit and smoke. Besides the fire incidents, lack of financing options available for Nano customers is also causing a dip in the sales. Banks are not willing to lend to the low-income customers with a concern that they might default. As per the statistics nine out of ten buyers of Nano apply for loan. Also the rate of interest which banks are charging for Nano is around 20-22% as compared to 13-14% for other cars. Tata has also increased the price of Nano, after which it is no longer a 1 Lakh Rupee car. Earlier this year company increased the price by Rs. 5000 due toBS IVemission norms and by Rs. 30,000 after few months due to increased input cost.
After having taken cognizance of the issues which led to the sales decline, TATA has taken various steps to rectify the situation. Keeping in mind the fire incidents, company will provide free safety upgrades. Additional safety features are proposed to be added in exhaust and electrical system of the car. Company has launched an exchange scheme under which customers can swap their two-wheeler for a Nano, by paying the differential amount. Company is also taking initiative to provide finance for Nano with the help of its financing arm Tata Motors Finance Ltd, by tying up with nationalized and cooperative banks etc. Company has improved interaction with customers and dealers to take their feedback in a bid to improve the product. There are various kiosks set up across the country to target the rural market, where people have neither driven a car nor visited a showroom. Also steps have been taken to reduce the lead time for the vehicle and to change the perception that there are still long booking queues for Nano.
Along with addressing the current concerns and issues coming up with product, Tata is planning to bring the electric and hybrid variant of Nano. Company is now looking at evolution of the vehicle including upgrades. The various variants of Nano, which are planned to be launched in coming years include Tata Nano diesel, aTata Nano Convertible, Tata Nano Station Wagon, Tata Nano Electric and Tata Nano Hybrid. There is high probability that the higher end models will be targeted at the International market. The prospective countries for launch are Brazil, Indonesia, China and Russia.
In the month of October, when the sale of Tata Nano was down by 85%, its rival Maruti had a record break sales with an increase of 50.32% compared to last year. The most sold models were Alto, Wagon R and Swift. Another competitor Hyundai with its winning cars like i10, i20 and Santro, recorded a growth of 22.70 per cent in the domestic market as compared to last year. But with the new initiatives and actions to provide additional protection to customer with easy availability of loans, Tata is hopeful that there will be renewed demand of Nano very soon.
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