The Homa Files

TakeAway: India’s middle class is enormous but still relatively poor.

With the world’s cheapest car, the Nano, Tata Motors thought that large segment was finally accessible.

But Tata forgot that the Nano comes with more than a low price, it also comes with the stigma of driving the world’s cheapest car.

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Excerpted from Washington Post, “India’s Tata Nano, ‘the world’s cheapest car,’ struggles to move ahead,” by Emily Wax, January 3, 2011

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 … [b]ut today, sales are so slow that the $2,200 Nano is barely seen on Indian roads. …

The podlike vehicle dubbed “the people’s car” has also suffered from … 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.

… the low sticker price, which was predicted to be Nano’s selling point … 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. …

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

… 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. …

Edit by DMG

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Full Article
http://www.washingtonpost.com/wp-dyn/content/article/2011/01/03/AR2011010302721.html

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This entry was posted on January 11, 2011 at 6:00 am and is filed under Mktg - Global - BoP. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.