Small Car. Big Ambitions
A novel concept of affordable car fails to take off
How do you measure automotive development in a country like India? Whatever your responses are, Ratan Tata apparently measured it in a wrong way. He thought Indians need a small no frill car that could fit into the budget of two motor cycles and take them anywhere on a mileage of a Bajaj Chetak scooter. He came up with something similar and people upgraded their preference to six motor cycles and mileage of Bajaj Super.
The result is a disaster in Gujarat that no one wants to debate or analyse, no media wants to dissect and no industrialists want to follow. It is called Tata Nano.
There are no clear theories why Nano car failed though a number of analysts believe Tatas could not position it properly. It was proclaimed as a poor man’s car that no rich want to buy. The poor opted for brands that the rich kept as their second car. In between the rich and the poor – the middle class failed to notice beyond Maruti and ultimately Nano turned out to be an orphan.
Currently the Nano plant is shut on inventory pile up as Nanos are hardly sold anywhere as the hype over it has settled down so quickly. 2014 production was a dismal 21,538 units, as against the envisaged annual capacity of 2, 50,000 units. This is just 10% and these figures are worrisome for Tata Motors which has not been able to position itself as a reliable product in the country in the mid level passenger car segment.
Tatas have some of the biggest luxurious sedans to its name while it voluntarily accepted to sell Fiat cars and horribly failed to fulfill the commitment. At the same time it has the smallest car Nano and despite its total failure, Tatas are seriously thinking of launching the Kite platform, yet another small car segment.
There are two ways to look at this issue. One is through a developmental prism and the other is through environmental-state freebie mirror. Critics say the loan Gujarat has given to a private entity – one fourth of state’s annual budget – payable in 20 years at an interest rate of a peanut should not have been done. Going a step further it made EMI for the land price, gave paved roads, put piped Natural Gas, waived off electricity duty, land transfer charges and a few says it has also been allowed to flout environmental rules by not mandating them to put specified waste disposal plant and underground water recharging. Not all of these may be true but the fact remains that Nano was born with a silver spoon and it got spoilt by the luxury it enjoyed at the conception stage itself.
The state argues unless it provides such freebies, setting up of big factories are not possible. The state’s original plan was to build an automotive hub in and around Sanand – very close to Ahmedabad and Tata plant was a key element to this plan. Indian Express reports that over “Rs 3,000 crore, a majority of which have been from multinational companies producing automobile components from Japan, Germany and United States” are already in place and most of them have also curtailed their production to cope up with the dwindling demand for spare parts.
Politically, Nano was projected as the key factor to the developmental plank BJP used for its election campaign. It also acted as a catalyst to damaging the image of West Bengal as anti-development. Systematic campaigns made people to believe this as the defining factor in India. But now that the aim is achieved, will this be yet another ill-conceived project that helped only the plank and not the messenger?
Tatas have tried their best to reposition Nano as a youthful car with a new campaign targeted at the upwardly mobile youths of India. Rediffusion Y&R did a good job with its ‘awesome’ campaign highlighting the ‘youness’, ‘kickassness’, ‘epicness’ and ‘magicness’ of the product.
But the problem was that the product itself didn’t get the fillip as much as the campaign did. I asked an elderly retired Financial Analyst who worked for a nationalized bank and a proud owner of Nano what he thought Nano could take off. He said ideally Nano should have positioned at new drivers dreaded at manual transmission. It can only take off if it comes out with an automatic transmission primarily aimed at erratic women drivers whose synchronization between clutch brake and accelerator is notoriously dangerous on the roads.
Having been victim of such driving myself, I couldn’t have agreed more.
Originally Published on Commodity Online