💫 Summary
The Tata Nano, intended to be an affordable car for the masses in India, failed due to high production costs, poor quality, and unrealistic price expectations. Despite initial hype and pre-orders, the Nano's price eventually increased, making it less accessible and less appealing to potential buyers.
✨ Highlights📊 Transcript
The Tata Nano, designed to be an affordable car for the masses, failed to meet expectations in India.
Tata is a 150-year-old Indian company that started making cars in 1954.
Tata's Ace, a light truck, was a success and inspired the idea of creating an affordable car.
The Nano was meant to compete with the Suzuki Alto, the best-selling car in India at the time.
Tata Nano aimed to create an affordable car, with a price tag of 1 lakh rupees ($2,500 USD), by reducing costs through various measures.
The team faced the challenge of making an affordable car due to the doubling price of steel.
The car was designed to be compact and comfortable, with a turning circle of 4m.
Tata decided to take the price as a challenge and aimed to make a 1 lakh car.
Cost-cutting measures were implemented, such as reducing the number of fasteners and simplifying construction.
Tata Nano was launched with stripped-back features, but the mid-level and top-range models included additional features such as air conditioning, power brakes, and cup holders.
The wheels of Tata Nano were the same size as those found on earlier Maruti Suzuki's.
Tata worked with various partners for the production of components.
Some suppliers decided to take little or no profit from the venture as a sense of national pride.
The Nano was launched with a stripped-back interior, with only a speedometer and a steering wheel.
The Tata Nano failed due to several reasons including the price increase, lack of appeal compared to motorcycles, and production issues.
Used car prices fell and sales of Maruti Suzuki Alto declined before the Nano's launch.
Tata's advertising emphasized the benefits of the Nano over motorcycles.
The initial price of the Nano was low but later increased significantly, making it less competitive.
The Nano's price was almost four times higher than a motorcycle, making it less attractive for mass adoption.
Motorcycles have lower production costs as they don't require crash structures or meet the same emissions standards as cars.
Production ramp-up issues at the new factory caused delays in delivering pre-orders.
Initial reviews highlighted poor quality and fit and finish issues, leading to a perception that the Nano was a cheap car rather than a great priced car.
Tata Nano failed due to various reasons including misjudgment of target market, low safety rating, unwanted publicity from fires, and unsuccessful attempts to introduce alternate fuel sources.
Initially, Tata Nano attracted urban customers as a second car, not rural customers.
Tata's sales target of 350,000 cars a year by 2010 was far from reality, with only 100,000 cars sold in almost 2 years.
The Nano's hopes of a sales boom in Europe were dashed when it received a 0-star safety rating and faced unwanted publicity from fires.
Tata's attempts to introduce alternate fuel sources like compressed air and electric versions were unsuccessful.
Tata Nano's attempts to improve sales included introducing special models, updates, and financial assistance, but the car ultimately failed due to unmet expectations and being inferior to the competition.
Tata released special models like the Nano Twist and Super Nano to boost sales.
The GenX Nano update included an opening boot, automated manual gearbox, and improved styling.
The Nano became more practical with a larger fuel tank and financial assistance was offered to help customers afford it.
Despite low sales, Tata continued to sell the Nano until production ended in 2018.
The Tiago replaced the Nano as Tata's most inexpensive car, but at a higher price.
00:00The Tata Nano continues in a long line of inexpensive “people’s cars”, designed
00:05to push car usage to the masses.
00:08Many of these cars succeeded and fuelled both car ownership, and in many cases the standard of living.
00:15When the Nano was launched it was touted as a car that that would change India, but in
00:2010 years production stopped with just 300,000 sold.
00:24How did a car designed to move Indians from their motorcycles into a comfortable 4-seat
00:30car fail, and what’s Tata’s future strategy for an entry level car?
00:36This is the Tata Nano Story.
00:45Tata is a giant 150 year old Indian company
00:49that makes everything from tea to buses.
00:52They started making cars in 1954 when they entered into a joint venture with Daimler-Benz.
00:59The car division continued to grow, creating the first Indian designed and built car, the
01:04Indica in 1998 (with a little help from an Italian design house).
01:10They would purchase Jaguar Land Rover in 2008, and in 2005 they decided to make a light truck
01:17to take on auto rickshaw’s or tuk-tuk’s.
01:20These are used everywhere in India as taxis, light vans and personal transport but are
01:26little more than motorcycles with three wheels and a roof.
01:30Tata’s new Ace would take on Japanese kei-car microvans made in India.
01:35The Ace was an immediate hit, and Tata started thinking about replicating the success with
01:40an affordable car.
01:42For many people in India their family transport is a motorcycle, and many can get creative
01:47with how many you can fit on it!
01:50The Indian economy was beginning to take off after years of slow growth, which meant
01:55more people with the money to trade up to a car.
01:58Tata set their sights firmly on the Suzuki Alto, produced in collaboration with Indian
02:03company Maruti, that was the best-selling car in India, which by 2008 would sell over 1M.
02:11They assembled a young team mostly aged between 25 and 30 and headed by Giresh Wagh
02:17who’d lead the team that created the Ace truck.
02:20They were given 3 goals.
02:22The car, dubbed the Nano, would have to have to be inexpensive to manufacture, it would
02:27have to conform to current and upcoming regulations, and it would have to meet aggressive fuel
02:32consumption and performance targets.
02:35The initial design was not much more than a quadracycle with an engine; a car boiled
02:40down to its essential elements.
02:42Bars replaced doors, and it had plastic flaps to keep out the rain.
02:46They presented the concept to management who baulked at the car’s simplicity.
02:51The team was told to go back to the drawing board and make something more resembling a car.
02:57But with the price of steel doubling in 4 years, making an affordable car would be more
03:02challenging than ever.
03:04They persevered and with the help of the Italian design house that had styled the Indica,
03:08produced a compact four-seater only a little bigger than the 1950s Fiat 500, with a class-leading
03:144m (13' 1") turning circle.
03:17Being taller than the Fiat 500, it sat four in comfort, allowing even 6 footers to get
03:23in and out easily.
03:24Tata’s Chairman – Ratan Tata lauded the new car to the press.
03:29When pushed for how much it was going to cost, he threw out a figure – 1 lakh.
03:34A lakh is 100,000 rupees or about £1,300 ($2,500 USD, €1,700, $2,900 AUD).
03:38That’s a great soundbite and makes a great headline, so the press ran with it, and the
03:44Nano quickly became touted as the 1 lakh car.
03:48This was a very aggressive price for a new car.
03:52Rather than walking it back, Tata decided to take the price as a challenge.
03:57Could they really make a 1 lakh car?
04:01As a Tata executive said after the car was launched – “If you want to innovate, take
04:05a bold challenge, make a public announcement, and it will happen.”.
04:10Those are fine words, but “it will happen” is wishful thinking.
04:14There are a lot of steps between having an idea and executing a successful product.
04:20Someone should maybe have told him about Google Glass, 3D TVs or Windows Vista!
04:26The company knew they would have to be aggressive about cost cutting.
04:30After the body had been designed it was reworked to reduce the number of fasteners.
04:35This reduced weight, simplified construction and lowered the production cost.
04:39The base model would only have one door mirror, one door lock, one wiper blade,
04:443 lug nuts on each wheel instead of the usual 4 or 5, and no fuel filler cap – you had
04:50to open the bonnet to fill up, all in the name of providing a car everyone could afford.
04:56It didn’t even have power locks, although to quote a Jasper Carrott joke about the 2CV,
05:01it didn’t matter as you could reach all four doors from the driver’s seat!
05:06The engine was also minimal.
05:08The team wanted to buy an off-the-shelf engine, but none met their requirements, so they decided
05:12to build their own.
05:14To save weight it was manufactured from aluminium, making it less than 600kg (1,300lbs).
05:20The initial 2-cylinder 540cc engine lacked power, so the capacity was increased not once
05:26but twice to 624cc, producing 35hp (26 kW) and giving the car a top speed of 65mph
05:34(105 km/h) and great fuel economy.
05:37The wheels might have looked tiny, but at 30cm (12”) they were the same size as those
05:42found on earlier Maruti Suzuki’s, which stood up to the punishment of Indian roads.
05:47Tata worked with various partners to produce components such as GKN for the
05:52driveshaft and Rane Group for the steering.
05:55Just like they challenged themselves to cut costs, they pushed their suppliers to do the same.
06:00With the Nano starting to attain the status of a national car project, some suppliers
06:05decided to take little or no profit from the venture as a sense of national pride.
06:11The new car was launched with a big splash at the Auto Expo in New Delhi in January 2008.
06:17The Nano really was a stripped back car – inside there was a speedometer and a steering wheel
06:23and not much else!
06:25The mid-level CX model did include air conditioning and a heater, power brakes, tinted glass,
06:30a rear parcel shelf, uprated seat fabric and more exterior colour options.
06:36The top of the range LX model got all of this plus a passenger side door lock, central locking,
06:42electric windows, front and rear fog lights, | the all-important cup holders and – something
06:48of a surprise for a car with a top speed of just 65mph – a sporty rear spoiler!
06:54Tata projected annual sales of 250,000 cars, and the press predicted the Nano would have
07:00a major impact on the Indian car market.
07:03This would be India’s Beetle, Mini, 2CV, Corolla, Model T or Fiat 500; and Tata themselves
07:11would laud the Nano as “The People’s Car”.
07:14There was talk of exporting this affordable world car to Africa, Latin America and Southeast
07:19Asia, or even building factories there to produce it.
07:23The new car was to be built in a new factory in Singur, West Bengal, in one
07:28of the most easterly parts of India.
07:31It was a poor agricultural area of the country, and the Government felt industrialisation
07:35would help raise living standards.
07:38Land was purchased to build the factory, but there was a big backlash from the local population.
07:43Local elected officials had promised to give land to locals to farm, so building a
07:48factory on this land was the opposite of what they wanted.
07:51After much protesting Tata was forced to abandon the West Bengal factory and at the last-minute
07:58switch to building a factory in Sanand, Gujarat on the opposite side of the country.
08:03With the Nano being launched at the start of 2008, and the West Bengal factory problem
08:08blowing up the following summer, Nano production was put on the backfoot, especially as monsoon
08:14floods delayed the new factory, and it would take until the following summer until limited
08:18production could begin.
08:20Despite this, expectations for the new car were high, and Tata planned to increase production
08:25capacity to 350,000 cars per year by 2010.
08:30In the run up to the Nano’s launch, used car prices fell as much as 30% and sales of
08:36the Maruti Suzuki Alto fell 20%.
08:40Tata’s advertising focused heavily on the benefits the Nano offered over a motorcycle.
08:45When pre-orders opened up, Tata got over 200,000 customers paying a small deposit,
08:51with the Nano website getting 1M hits every day.
08:55But it was becoming clear that there was a big gulf between “making a public announcement”
09:00and “it will happen”.
09:02Although Tata allowed the first 100,000 cars to be sold for 1 lakh, prices couldn’t
09:08remain that low.
09:09The car’s price would soon rise 78% to around £2,300 ($4,500 USD, €3,100, $5,100 AUD).
09:14That might sound like it was still a good deal, but the Maruti 800 was only 16% more,
09:20meaning this was hardly the game changing car Tata had originally proposed.
09:25And with the Nano being almost 4 times the price of a motorcycle, it was hardly the vehicle
09:31that would persuade the masses to move from 2 wheels to 4.
09:35In the cold light of day it was clear why making a car for double the price of a motorcycle
09:40was impossible.
09:42Motorcycles don’t need the same crash structures, they don’t need to meet the
09:45same emissions standards that require things like fuel injection, and of course a car that
09:50holds 4 in comfort is made up of way more physical stuff than a motorcycle.
09:55And that stuff costs money.
09:57Production ramp up issues at the new factory weren’t helping things either.
10:02Of the 200,000 pre-orders, only 30,000 had received their cars 9 months after the first
10:08was delivered, and many were cancelling their orders.
10:11And after all that hype, the first reviews weren’t stellar.
10:15With a new factory it was maybe inevitable, but the car suffered from poor quality and
10:20fit and finish issues.
10:22| This added to people’s feeling that rather than being a great priced car, it was simply
10:27a cheap car.
10:29It felt cheap, and to add insult to injury it wasn’t that cheap either.
10:32It didn’t even have an opening rear, meaning luggage had to be passed through the car.
10:37It soon got the reputation as a “poor person’s car”, and customers flocked to nearly new
10:43“real” cars that held more prestige.
10:46Another issue Tata faced was their ability to sell into the rural markets that they were
10:51focused on.
10:52Most Tata dealerships were in urban areas, so it was hard for Tata to sell its car to
10:58its target market.
10:59They would work to open more dealerships in rural areas, and in 2010 would create
11:04the SuperDrive event where three cars, bedecked in the colours of the Indian flag would tour
11:10India drumming up interest.
11:12Tata would take some heart from the Nano winning Indian Car of the Year, but it quickly became
11:17clear that it wasn’t rural customers buying, but urban customers looking for a second car.
11:23It seems Tata was in a state of denial, as by 2010 they were still talking
11:28of sales of 350,000 a year, but reality was getting in the way, after almost 2 years only
11:34100,000 cars had been sold, despite car sales in India booming 22%.
11:41| Still hoping for a sales boom once production had fully ramped up, Tata took the Nano to
11:46Europe and showed off the Europa concept, pitching it as a micro city car.
11:52Five years later Tata were still hoping to launch the car in Europe and went through
11:56NCAP safety testing, but hopes were dashed when the car received a 0 star rating – far
12:02from the 4 stars the company was hoping for!
12:06Instead of good news, there was more bad news.
12:092 Nano’s caught fire which caused unwanted publicity.
12:13Both fires weren’t problems with the Nano itself – it was a ruptured fuel line and
12:18a “foreign object” on the exhaust, but Tata would extend the Nano’s warranty from
12:2318 months to 4 years to quell worries.
12:26Sales didn’t improve in subsequent years, even though ride and handling was improved by 2012.
12:33Tata had investigated alternate fuel sources to reduce the total cost of ownership that
12:38would make the car more competitive.
12:41The first study had started before the Nano had launched, running the car on compressed
12:46air with the help of French firm Motor Development International.
12:50There was a hope the car could go 120 miles (200 km) before needing to be refilled, but
12:55both companies could never get it to work well enough to bring it to market.
13:00Tata investigated an electric version of the car in 2010, using super polymer lithium ion
13:06batteries to give it a 100 mile (160 km) range, but while the proposal was shown at the
13:11Geneva Motor Show, this was also abandoned, likely because of the prohibitive cost in
13:17India, and the fact the Nano hadn’t been launched in countries that would afford those
13:21expensive batteries.
13:24Tata tried again in 2013, releasing a bi-fuel version of the Nano that could run on both
13:30petrol and compressed natural gas or CNG.
13:33It was launched in areas that already had CNG stations and was available at a small
13:38premium over the regular Nano.
13:41But with gas storage in the boot, luggage space – already pretty cramped - was further compromised.
13:47 Sales were a fraction of what Tata had expected, only reaching 4,000 on a good month.
13:53Only 250,000 cars had been sold in the first 6 years – that’s how many Tata were expecting
13:59to sell in just the first year!
14:02Tata was losing money and so were its suppliers, some who had planned to make little or no
14:07profit in this patriotic endeavour to get India moving.
14:11To drum up sales the special Nano Twist model appeared in 2014 with power assisted steering,
14:17and JA Motorsports made a special Super Nano with a 230hp (171 kW) engine, just to show
14:24what this plucky little car could do.
14:27Tata released the first major update in 2015, with the cool-sounding name of the “GenX Nano”.
14:34The big change was at last an opening boot, which also gave easier access to the engine,
14:40but the car also got a 5-speed automated manual gearbox with a sport option and updated styling.
14:47And although the price still wasn’t 1 lakh, it wasn’t any more than the previous generation.
14:53But underneath the body was improved with a better frontal crash structure and moving
14:58the radiator to the front helped with weight distribution.
15:01The Nano also became more practical with a 24 litre (5.3 imperial gallons, 6.3 US gallons)
15:05tank instead of the previous 15 litre one (3.3 imperial gallons, 4 US gallons), giving
15:08a driving range of over 350 miles (566 km).
15:12To help customers move up from their motorcycles to the Nano, Tata worked with financial companies
15:17to offer competitive loans.
15:20Unable to admit defeat in their national car project, the Nano kept being sold for much
15:25longer than it should.
15:27Towards the end only a handful of cars would be produced every month.
15:32But eventually even Tata had to face reality and production ended in 2018 after selling
15:38less than 300,000 cars.
15:41The Tiago took over as Tata’s most inexpensive car.
15:45Launched in 2016, but at almost double the price of the Nano, Tata is ceding the entry
15:51level market to its competition.
15:55The Nano was a noble project – to improve the lives of millions of Indians and further
16:00democratising transport.
16:03But serious mistakes were made, both in setting expectations that couldn’t be met, and by
16:08delivering a product that was little better than the competition.
16:12This caused a backlash that meant the car was never given another chance to succeed
16:17after the initial public disappointment.
16:20But the core problem is the Nano didn’t solve the problem it set out to fix – the
16:24average Indian couldn’t afford a car that was 4 times the price of a motorcycle.
16:30But the Indian economy continues to improve slowly year on year which means living standard improve.
16:37More can afford more necessities and creature comforts, and yes, fewer children every
16:42year have to balance precariously on motorcycle seats between their parents.
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FAQs about This YouTube Video

1. What were the reasons behind the failure of the Tata Nano?

The Tata Nano failed due to high production costs, poor quality, and unrealistic price expectations.

2. How did the initial hype and pre-orders affect the Tata Nano?

Despite initial hype and pre-orders, the Nano's price eventually increased, making it less accessible and less appealing to potential buyers.

3. What was the intended target market for the Tata Nano?

The Tata Nano was intended to be an affordable car for the masses in India, but it failed to meet the expectations of the target market.

4. How did high production costs contribute to the failure of the Tata Nano?

High production costs made it difficult to maintain the Nano's intended affordable price, leading to its failure in the market.

5. What impact did the unrealistic price expectations have on the Tata Nano?

Unrealistic price expectations hindered the Nano's success, leading to its eventual failure in the market.

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