India's Tata Nano, 'the world's cheapest car,' struggles to move ahead

"The world's cheapest car" was a cult hit at first, but it has suffered from safety concerns and what critics call poor marketing and competition from a flood of slightly more expensive cars.
Washington Post Staff Writer
Monday, January 3, 2011; 1:13 PM

NEW DELHI - When the Tata Nano - known as the world's cheapest car - zipped out of factories in 2009, it was praised as an example of Indian innovation in cost-cutting. It quickly became a cult hit, with its own Facebook travelogue journal and fast-selling counterculture T-shirts.

But today, sales are so slow that the $2,200 Nano is barely seen on Indian roads. This tiny car has big problems.

At the top of the list are safety concerns. About half a dozen Nanos have burst into flames, with fires starting in the exhaust or electrical systems, since April 2009.

The podlike vehicle dubbed "the people's car" has also suffered from what critics call poor marketing and competition from a flood of slightly more expensive cars made by companies such as General Motors India and Maruti Suzuki. Those companies have launched aggressive campaigns aimed at India's growing young families and call-center workers, with claims that their cars are better made and more reliable.

Then there's the low sticker price, which was predicted to be Nano's selling point. But it has also contributed to its downfall.

For India's newly middle class, owning a car is the ultimate sign of status, and the Nano is synonymous with something cheap, said Ashish Masih, assistant editor of India's edition of What Car? Magazine.

"It's seen as a poor man's car," said Masih. "People don't want to take that image along with them. If they change that feeling, sales might pick up again."

Many of the top-selling automobiles fall into a sweet spot of under $7,000, industry experts say.

With the spread of new suburbs, an increasing number of highways and a youthful working population, India is the second-fastest-growing market for car sales in the world after China. The original vision for the Nano was that it would put the dream of car ownership within reach of India's emerging middle class, which has about 300 million people.

But at the Nano factory in India's western state of Gujarat, about 7,000 cars are parked in the open, and just 509 cars were sold from the plant to dealers in November, according to the Society of Indian Automobile Manufacturers.

The lagging interest in the Nano comes at a time when India's auto industry as a whole is enjoying record sales, with a reported a 33 percent growth from April to October 2010, compared to the same period in 2009, according to a study by SIAM.

Tata Motors is trying to revive the Nano's fortunes. Debasis Ray, head of corporate communications for the company, said it has launched a comprehensive marketing push and added a free four-year manufacturer's warranty.

Because of the fires, Tata is asking customers to bring in their Nanos so the company can correct any problems. Tata is careful not to classify it as a recall, and says that problems are not widespread.

The company is also launching nationwide training clinics about the car, along with a rural television campaign. There are now about 70,000 Nanos on the country's roads.

"For thousands of customers, particularly in the hinterlands, who do not own cars, entering this category is a significant decision," Ray said. "The good news is our customer satisfaction studies with current Tata Nano owners indicate that over 80 percent are satisfied or very satisfied with the car. We have a lot of confidence in the Nano."

Some customers agree.

Vanessa Able, a travel writer and photographer, drove a Nano across India and wrote a Facebook blog, the Nano Diaries, about her adventures. Her Nano had only minor problems - a few flat tires on some of India's more rutted roads.

"I was really drawn by the idea that India was making this affordable car that has so much potential in terms of the way it reflects the changes that were happening in India socially and economically, " Able said.

But part of the challenge now for the Nano may be correcting the image of the "world's cheapest car" for ordinary Indians.

Shushank Sharma, 22, a computer operator who lives in Gurgaon, a sprawling suburb of New Delhi, said he had a choice between a Nano and a two-wheeler motorbike, which was around the same price. He bought the bike, which is also seen as better at weaving through India's chaotic traffic.

"I don't like the way the Nano looks to people and it's all about the look," Sharma said. "I take the bike to work. But if I have to go hang out with my friends or go for a marriage, then I prefer a car. But I would prefer to sit at home if I have to go in a Nano."

Special correspondent Ayesha Manocha contributed to this report.

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