Thursday, October 17, 2013

Why the World's Cheapest Car Flopped

Via WSJ

When the Tata Nano, a stripped-down minicar priced at around $2,000, was introduced in 2009, it was marketed as a car that would transform the way aspiring consumers in India and other developing countries got around.
It turns out that those climbing into India's middle class want cheap cars, but they don't want cars that seem cheap—and are willing to pay more than Tata reckoned for a vehicle that has a more upmarket image.
A product without a market? It seems that the company did not get the customers' needs right. 
When Tata first designed the Nano, engineers tried to pare down features to keep costs in check. The car is the least expensive mass-produced automobile in the world.

When the first models hit the roads, the base model had no air conditioning, no stereo and just a single windshield wiper. The Spartan interior had no glove box and thinly padded seats that didn't adjust.
Another problem is the branding/perception:
But changing public perceptions of the Nano and turning it into something akin to the Volkswagen Beetle or the Morris Mini will take time, company executives admit.
"Perceptions are hard to change overnight. It's going to take us a while," said Tata's Mr. Arora.

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