The Tata Nano's plan to market the cheapest car in the world to India's
urban poor went up in flames. Now the little car that couldn't is coming
to the U.S.—and going upscale.
I’m not a car person. Living in Manhattan, with great public transportation, $12 bridge tolls, and $400-a month-parking, there’s no reason to be. But four years ago, like millions of others, I was captivated by the launch of a new car on the other side of the world—India’s tiny Tata Nano. So I found myself visiting an auto showroom in New Delhi to see what all the fuss was about.
By the time it hit the market, everyone in India knew the Nano’s creation myth. Tata’s chairman, Ratan Tata, had found himself pondering an image that is disturbing to anyone visiting the country: a motorbike weaving through the insane traffic with a family of four perched precariously on the back. Tata had an epiphany, which reflected his company’s long tradition of corporate social responsibility: why not build a car that could carry these families safely, a car that wouldn’t cost much more than a motorbike, a fuel-efficient vehicle (55-60 miles to the gallon) that would meet the aspirations of millions of people emerging from poverty without wrecking the planet?
Looking like a canary-yellow boiled egg on wheels, the Nano was billed as the cheapest car in the world, the “one-lakh car”—100,000 rupees, in other words, or about $2,000. Thanks to saturation media coverage and an aggressive social media campaign, Nano became a national buzzword. Before commercials, newscasters no longer said they were taking a short break; they were taking a nano-break. Tata predicted that Indians would buy a million Nanos a year. Around the world, too, the car became an exciting emblem of the new India, the nation of high-tech entrepreneurs, eight percent annual growth rates, and Slumdog Millionaire (which won the Oscar for best picture just a month before the Nano was launched). What was not to like?
Well, as it turns out, quite a lot. At the time, Tata’s idea seemed a paradigm of enlightened thinking. But four years later, the Nano has become a case study in the difficulty of achieving such dreams. The signs are that our path to a sustainable urban future may depend on something more prosaic than a grand vision and a noble purpose: what counts is what marketing types call “cultural drivers of brand perception.” And that lesson applies not just to the Nano, but to the challenge of introducing small, fuel-efficient cars here in the United States.
After four years, Tata has found fewer than a quarter of a million buyers for the Nano, and the great majority are not the first-time car owners at which it was aimed. For the most part, it has been bought as a second or third car, a chic toy for the wives and kids.
So what went wrong? At first, the problems seemed transient. Plans to start production near Kolkata were aborted after farmers protested the appropriation of their land for the Nano assembly plant. Tata had built the brand on its claims of passenger safety, but TV news showed lurid footage of a handful of Nanos bursting into flames. Because of the increasing cost of raw materials, the promise of a “one-lakh car” seemed more hype than reality. The sticker price went up to about $2,800; the air-conditioned model was $4,000 (and driving in India in summertime without air-conditioning is a daunting proposition).
Monthly sales of the Nano peaked in April 2011, at 10,000. By April 2013, when the figure plummeted to fewer than 1,000, it was clear that the reasons for the failure ran much deeper than fires and farmers’ protests. The Indian auto blog Team-BHP.com ticked off a number of factors: most two-wheeler owners didn’t know how to drive a car; gas was too expensive for the target market—the Nano might get 55 miles per gallon, but a motorbike could get five times as much; but most important, Tata had blundered by making the Nano’s low price its main selling point. “Car ownership in India is greatly driven by aspirational value,” Team-BHP wrote, “and owning the ‘cheapest car in India/the world’ is not something one aspires to. Simply put, the Nano lacks the all-too-crucial status that first-time car owners are looking for.” Far from being a mark of prestige and upward mobility, owning a cheap car might even be a stigma.
Dain Dunston, an American corporate branding guru, had contributed mightily to the mystique of the Nano with a book he co-authored in 2011, Nanovation: How a Little Car Can Teach the World to Think Big and Act Bold. This summer, he wrote what sounded like its epitaph: “The passion to solve a great social problem and the elegance and ingenuity of the solution were no match for not understanding what the customer actually wanted.”
So Tata has just announced that it will do what any company does in these circumstances: rebrand. The Nano will no longer be a “poor man’s car,” but a “smart city car.” The image will be more luxurious, more youthful and cool—although, interestingly, it will also be greener, with the promise of even greater fuel efficiency.
So why is all this relevant to the future of urban transportation in the United States? The global business consultancy firm HIS, looking to a world of tougher environmental regulations and fuel economy standards, predicts a 29 percent increase in worldwide sales of “city-savvy” subcompacts in the next two years, and like any auto company Tata craves a share of that market. One reason for the Nano’s rebranding is that for the first time, Tata will be targeting Europe and the United States, where the concepts of green, cool, and upmarket intersect. To drive home the message, Jay Leno made a promotional video last year—dressed in a silvery brocaded kurta, backed by an Indian flag, and surrounded by Bollywood dancers—announcing that he planned to be one of the Nano's first U.S. buyers.
http://www.onearth.org/articles/2013/09/tata-nano-can-india-brand-a-better-smart-car
I’m not a car person. Living in Manhattan, with great public transportation, $12 bridge tolls, and $400-a month-parking, there’s no reason to be. But four years ago, like millions of others, I was captivated by the launch of a new car on the other side of the world—India’s tiny Tata Nano. So I found myself visiting an auto showroom in New Delhi to see what all the fuss was about.
By the time it hit the market, everyone in India knew the Nano’s creation myth. Tata’s chairman, Ratan Tata, had found himself pondering an image that is disturbing to anyone visiting the country: a motorbike weaving through the insane traffic with a family of four perched precariously on the back. Tata had an epiphany, which reflected his company’s long tradition of corporate social responsibility: why not build a car that could carry these families safely, a car that wouldn’t cost much more than a motorbike, a fuel-efficient vehicle (55-60 miles to the gallon) that would meet the aspirations of millions of people emerging from poverty without wrecking the planet?
Looking like a canary-yellow boiled egg on wheels, the Nano was billed as the cheapest car in the world, the “one-lakh car”—100,000 rupees, in other words, or about $2,000. Thanks to saturation media coverage and an aggressive social media campaign, Nano became a national buzzword. Before commercials, newscasters no longer said they were taking a short break; they were taking a nano-break. Tata predicted that Indians would buy a million Nanos a year. Around the world, too, the car became an exciting emblem of the new India, the nation of high-tech entrepreneurs, eight percent annual growth rates, and Slumdog Millionaire (which won the Oscar for best picture just a month before the Nano was launched). What was not to like?
Well, as it turns out, quite a lot. At the time, Tata’s idea seemed a paradigm of enlightened thinking. But four years later, the Nano has become a case study in the difficulty of achieving such dreams. The signs are that our path to a sustainable urban future may depend on something more prosaic than a grand vision and a noble purpose: what counts is what marketing types call “cultural drivers of brand perception.” And that lesson applies not just to the Nano, but to the challenge of introducing small, fuel-efficient cars here in the United States.
After four years, Tata has found fewer than a quarter of a million buyers for the Nano, and the great majority are not the first-time car owners at which it was aimed. For the most part, it has been bought as a second or third car, a chic toy for the wives and kids.
So what went wrong? At first, the problems seemed transient. Plans to start production near Kolkata were aborted after farmers protested the appropriation of their land for the Nano assembly plant. Tata had built the brand on its claims of passenger safety, but TV news showed lurid footage of a handful of Nanos bursting into flames. Because of the increasing cost of raw materials, the promise of a “one-lakh car” seemed more hype than reality. The sticker price went up to about $2,800; the air-conditioned model was $4,000 (and driving in India in summertime without air-conditioning is a daunting proposition).
Monthly sales of the Nano peaked in April 2011, at 10,000. By April 2013, when the figure plummeted to fewer than 1,000, it was clear that the reasons for the failure ran much deeper than fires and farmers’ protests. The Indian auto blog Team-BHP.com ticked off a number of factors: most two-wheeler owners didn’t know how to drive a car; gas was too expensive for the target market—the Nano might get 55 miles per gallon, but a motorbike could get five times as much; but most important, Tata had blundered by making the Nano’s low price its main selling point. “Car ownership in India is greatly driven by aspirational value,” Team-BHP wrote, “and owning the ‘cheapest car in India/the world’ is not something one aspires to. Simply put, the Nano lacks the all-too-crucial status that first-time car owners are looking for.” Far from being a mark of prestige and upward mobility, owning a cheap car might even be a stigma.
Dain Dunston, an American corporate branding guru, had contributed mightily to the mystique of the Nano with a book he co-authored in 2011, Nanovation: How a Little Car Can Teach the World to Think Big and Act Bold. This summer, he wrote what sounded like its epitaph: “The passion to solve a great social problem and the elegance and ingenuity of the solution were no match for not understanding what the customer actually wanted.”
So Tata has just announced that it will do what any company does in these circumstances: rebrand. The Nano will no longer be a “poor man’s car,” but a “smart city car.” The image will be more luxurious, more youthful and cool—although, interestingly, it will also be greener, with the promise of even greater fuel efficiency.
So why is all this relevant to the future of urban transportation in the United States? The global business consultancy firm HIS, looking to a world of tougher environmental regulations and fuel economy standards, predicts a 29 percent increase in worldwide sales of “city-savvy” subcompacts in the next two years, and like any auto company Tata craves a share of that market. One reason for the Nano’s rebranding is that for the first time, Tata will be targeting Europe and the United States, where the concepts of green, cool, and upmarket intersect. To drive home the message, Jay Leno made a promotional video last year—dressed in a silvery brocaded kurta, backed by an Indian flag, and surrounded by Bollywood dancers—announcing that he planned to be one of the Nano's first U.S. buyers.
http://www.onearth.org/articles/2013/09/tata-nano-can-india-brand-a-better-smart-car
