How Tata Nano hit a big bump in India...

The Tata Nano was a small car that was expected to deliver big numbers, the new plant at Sanand in Gujarat was built to produce 2.5 lakh units a year, eventually ramping up to 5 lakh units. But 15 months after a high-profile launch, it has encountered trouble at every turn — three instances of the car going up in flames and a few cases of smoke emanating from it (the last was in September), confusion about its positioning, a rather unexpected bunch of affluent initial buyers, poor distribution reach, and financing bottlenecks. Nano’s sales have dipped from 9,000 units in July to 3,000 in October to just a little over 500 in November. The number of workers there has decreased by 80% in the last month. 


Many dealers say they have not picked up any fresh stock during the last two months as they were trying to sell existing cars. Dealer inventories at the beginning of November are estimated to be 17,000-20 ,000 units, according to officials at Nano’s dealers and suppliers. The company says that inventory levels are not so high, though it declined to disclose numbers. 

“I am a little surprised by the Nano’s sales figures,” says the head of a rival car manufacturer speaking on the condition of anonymity . “The car was positioned as an alternative to two-wheelers , but that’s not happening. Those looking to upgrade from two-wheelers are put off by the negative publicity (over the fires) and safety issues and buyers of the top-end Nano will rather put in a few thousand more and buy another car like the Alto,” he adds. 

Maruti Alto has sold 3.93 lakh units, while over 71,000 Nanos have been sold since the latter was launched last July. The base version of Alto carries a price tag of Rs 2.54 lakh, compared to the Nano’s Rs 1.45 lakh (on-road in Delhi). 

“The Nano was to sell on ‘demand pull’ , but now it’s plagued with poor image and quality issues ,” says a top-ranking executive who has worked with a car company in the past. “The Nano was supposed to attract maximum footfalls to dealerships and have a rub-off effect on its other models. But it hasn’t .” 

Is the small car hurtling into a big crisis? And what is the company doing to fix it? It’s easy to attribute the deteriorating sales of the Nano to the incidents of the fire. (More on that later.) But there is perhaps also a deeper marketing failure that’s lurking behind the smoke.