Why the Failure of the Nano Has Been a Success

Why the Failure of the Nano Has Been a Success

Authored by: Josh Cleveland

The Tata Nano’s launch failed by nearly every measure. Sales fell far short of forecasts. The relocation of the factory was a debacle. One need not invent a colorful metaphor to describe the situation: occasionally, the car even burst into very real flames.

“The People’s Car” also known as the world’s cheapest car, cost a mere 100,000 rupees – about $2,000. Achieving this price point represents a feat of frugal engineering. Yet as others have noted: no one aspires to own the cheapest car in the world.

Sure, consumers love bargains. But vehicle choice makes a statement about the buyer, something well documented in JD Power’s research on why people buy Toyota’s Prius. It’s not about gas mileage; it’s about image. The image consumer segments from A to E want to project has nothing to do with being the cheapest in the world. As the editor of Auto Car India points out, Tata added insult to injury in that the top-end Nano model was priced at about 200,000 rupees (two lakh) while still being perceived as a one lakh value.

Tata missed the mark by a wide margin on many accounts. Yet despite these errors the Nano has accomplished some big tasks. There is now a race to build a better “world’s cheapest car.” Thousands of articles, blog posts, books, and commentaries have been written about why the Nano went wrong and how to avoid the same mistakes. Tata appears to have taken good notes. The company is coming back with what appears to be a better version this year. By persevering and maintaining a focus on the base of the pyramid, the company demonstrates the enviable capacity for leadership and foresight. Yet perhaps most importantly, the Nano presents other companies and development organizations some clear lessons from which to learn.

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