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|1st December 2010, 20:12||#1|
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Tata Nano-November Sales=506. Analysing the root cause and devising the solutions.
PLEASE READ CAREFULLY.
Some very important points to consider before we discuss this matter.
END OF THE ROAD?
A dream project of "motorization for all."
A dream conceived by Mr. Ratan Tata, known for out of box thinking and taking challenges positively and coming out triumphs. Whether it was the safari, the indica or the indigo, these were the products that were singularly responsible for putting India in the world map and earning global recognition as an automotive powerhouse. Unimaginable at one time, India is now one of the few nations on earth that can conceive, design and manufacture cars on its own, thanks to the abundance of talent that we have.
But sadly, car ownership is something that our country still lags behind, especially compared to the EU and the Americas. Just 8 or 9 in a thousand people own a car. Many of them either own a two wheeler or have to rely on public transport, still not developed or convenient in semi urban or rural areas despite the recent growth trajectory in this sector. It was this necessity that envisioned Mr. Ratan Tata, chairman of tata sons, to embark upon doing the impossible.
The mission: to design, conceive and develop a car costing no more than rupees one lakh for the base model. The psychological price barrier of one lakh immediately made news globally in 2006 when Ratan tata announced this project at the auto expo 2006. The automotive media went aghast, berserk and skeptics started to question Ratan tata's "sanity level". Critics even went to question his vision and challenged that the project would never take shape and the car will be doomed even before it was born.
But behind the curtains, the project was taking shape in a chamber of secrets. Undeterred by all the negative publicity and alarming raw material prices, the project went ahead full steam and the dream as beginning to shape up as a reality.
January 2008. Auto Expo, Delhi.
The world is waiting, and waiting, and getting impatient. So is the crowd, waiting in lakhs outside Hall number 11 for Mr. Tata to unveil his "lakhtakiya" car to the world.
The car is unveiled to the world and the first impressions are shocking. People celebate, grin and applause the achievement. An achievement called the Tata nano.
Overnight it becomes the rockstar of the global automotive industry. It makes more news than any other car launch has ever mad before. All critics applause India in this achievement, though some skeptics and "environmentalists" now begin to question the availability of mass motorization and how much the nanos would add to the already clogged streets of India, making them more chaotic. Critics be damned, Tata claims that the nano will be the least polluting in its class.
The nano makes its first overseas premiere. The press kits a distributed within minutes and demand is so high, Tata had to get 7-8 times more copies printed than it originally intended it to. So high is the craze and even there it gets a big thumbs up. Round won by Tata.
Now comes the center of controversies surrounding the car.
Engineering wise, the nano was perhaps the best overall car ever produced by Tata, even found out when I tested the car way back in q4 2009. Given the price restrictions bracket and restricted engineering challenges, it was nothing short of a masterpiece.
I even gets positive reviews from press, USA's edmunds insideline included. It sweeps away all major Indian car of the year awards, including the ICOTY 2010.
Sales settle in 3-3500 level, as much as tatas can produce from pantnager till the new factory comes up. every nano produced finds homes in many corners of the country and the first owners become superstars, getting more eyeballs from onlookers than most hypercars included. The country feels proud.
But bad luck strikes again. About 7-8 nanos catch fire in these periods till today and press not only in India, but globally now begins to question its safety and even question tata motors safety record by saying, "safety need not necessarily come CHEAP."
Negative publicity spreads across the country and tata motors now realize that they can no longer bite off more than they can chew. An investigation is ordered and given all clear after a couple of minor niggles sorted out. IS this negative publicity generated by the global media the second nail in the nano's coffin?
As soon as the new plant goes into operation built in a record 14 months, sales skyrocket to a consistent 8-9000 level for about 3-4 months. Looks like good times are back again for the little wonder.
Then the inevitable happens. News of fire again reverberates around the industry and nano sales start to skid to 5000-6000 odd level, as a result of perception. Third nail's cause?
And then another disaster strikes. The nano gets not one, but two price hikes as high cost of raw materials and rising input costs are proving to be too good to be true. Total hike comes in the rein of 15-20 grand depending upon the model and location.
Tata then announces that the nano is now available off the shelf in many parts of the country, this after 70,000 of the 2,03,000 nanos booked are delivered. Did Tata face huge booking cancellations?
And then sales drop down to just 3,024 in october.Contrary to the perception about plant capacity constraints or maintenance shutdowns, dealers are having huge stocks of nanos piling ups and some of them now start giving free accessories to move out the car.
Then comes the final nail in the coffin-the graph just drops to 506 in November, down a whopping 85 percent Y-O-Y.
Just a few days back, seeing falling sales, Tata m,otors makes an official statement of some additional design modifications that have been done to make the nano more safer than before. Not billed as a recall, but a goodwill repair.
So, what we need to discuss is the following points:
Now, before you all start saying this is "just another nano debacle thread", get a gist of the purpose and then put your replies.
The debate is open now, all the best.
Last edited by sidindica : 1st December 2010 at 20:31.
|1st December 2010, 20:48||#2|
Join Date: Sep 2010
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It really is painful to see the Nano sell just over 500 units in November. Its flagging sales can be attributed to its image. Yes,it was meant for the Indian family which had Mr.X driving his scooter with his son in front of him and him wife and daughter behind.
Tata has gone wrong with this marketing strategy. The sixth pay commission greatly improved the take home of government employees, surely they could have gone in for a car. The image of the car has let it down. I must say that I have read opinions of a few T-BHPians and they evidently didnt appreciate the effort that has gone into making the car. It was the smallest car that was there. Then just think of the mindset of the people out there. Instead of probably celebrating that they bought a car, they consider what people would think that 'this family bought the cheapest car in the market’, despite paying just 25% lesser than what an 800 would cost. And to get the extra brand value that the 800 came with. Also a chance to tell their friends and family that they bought a vehicle 'better' than the Nano. Obviously, to them bigger is better and to say that there is 23% more interior room or more legroom than the Polo wouldn’t hold weight in a society that is obsessed fair-skinned (Look for the analogy here, not just the term).
Plus the news of the fires would not have helped it cause.The media has been instrumental in belittling the car since its launch.
A people's car,let down by the people.
|1st December 2010, 20:57||#3|
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Very interesting and well written topic.
I drove the nano for the first time just 4 days back. And I must say I was flattered. The car is surely VFM. So I think that is not the root cause of the problem.
I was equally shocked on seeing the sales figures. According to me the problem faced by Nano is the thing you already mentioned.
1. The fire catching episodes. The Nano has become another casualty of a Media trial, something which has become the flavour of the modern Indian media. Some Nanos catch fire and the media just sensationalized it without trying to find a logical explanation to it. Personally I suspect some foul play or plain bad luck. Also we have to keep in mind that every now and then there are reports of many cars catching fire from other brands too( which are way more costlier).
2. The IMAGE factor. Luckily or Unluckily Nano has been associated with the image of a cheap 1L car (not that I feel 1L is a small amount). We Indians specially do love to flaunt. Moreover the price hikes has pushed it further towards 2L. So many people in the end might opt for an Alto or a used car.
The ease of availability of car loand and flexible EMIs also enable most people to go for that swanky hatchback rather then a "Poor Man's Nano".
3. The recent episodes of the brand new buses from TATA catching fire in Delhi also would have added to the woes of the Nano.
These are a few points which I feel are working against Nano. But I am still not convinced if these points explain the drastic fall in sales figures. A mere 506 Nanos sold is very hard to digest.
|1st December 2010, 21:19||#4|
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Well here are the things, I'd like Tata to do, immediately.
Last edited by safari_lover : 1st December 2010 at 21:20.
|1st December 2010, 21:22||#5|
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An Excellent thread Sid. Thought provoking et al. an engineering winner but a marketing flop (it the drastic fall in sales is true) drmohits point no 2 and recompose post "image" seems to be the reason for the poor sales. A good study for the management people.
|1st December 2010, 21:29||#6|
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I do agree that the Tata Nano is very noisy when heard from inside, matter of fact it reminds one of older front engine buses where the bonnet was right next to the driver, and after some time the sound insulation wears off so it is vibrating and noisy.
Next, extensive publicity given to cost cutting (as is being done to the Etios from Toyota even now) gave another nail in the coffin. We all know that three bolts/studs on a wheel will not inspire confidence in a country where older cars routinely drive with one nut/bolt/stud missing. Likewise, a single wiper is very difficult to digest in a country where 360 degrees vision is required while driving at all times especially in bad visibility.
Tata after sales service has also not been too hot lately. And the actual mileage achieved has not been too good either, from what one hears?
What could be a solution?
Frankly, reworking things will cost a lot, but it will be essential. The best option would be to try to bust the 3-wheeler market.
|1st December 2010, 21:36||#7|
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all about keeping up with appearances.
Do you want to be tagged as a cheap car driver(unless it's a known fact that you have enough cash to afford it as a second car)
The average family is also very cautious about their image in their respective societies.
People hesitate in real world situations regardless of whether he/she is rich or poor, he tends not to show it out(if the family is financially in trouble, they do not publicize the fact that they have financial troubles, But its the opposite ,if they are rich they flaunt it ).
The target market which the nano was aimed at has practically rejected it.
The nano has lost it because of its "too cheap" image which turned out to be a negative point for it rather than a + point.
Nano has flopped period , Not because it is a bad car (i love it and it's a fantastic car) but because of the image that it portrays.
Last edited by vinaydas : 1st December 2010 at 21:39.
|1st December 2010, 21:43||#8|
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Nice thread - I too gave it some thought and agree more or less to the points made by safari_lover.
I think (and that is evident from the buying patterns) that nano (specially the top variants) needs a brand repositioning as a college going kid's aspiration, or a successful man's city roundabout etc etc whatever is best. They can also play the environment card (don't take your gas guzzler to work if you are alone, take the efficient nano instead!).
TATA engineers/brand advisors - Time to put on your thinking hats on again!
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|1st December 2010, 21:43||#9|
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I think the marketing strategy was an issue there. Most of the nano owners out there I know, owns the same as their secondary car. Most of them use these cars to go office daily, or made as a present to his/her son/daughter on their b'day or are used by guys who doesn't have a covered parking for their costly car. But don't know more than a couple family who owns a nano as their primary car. So I seriously feel that the target customers have changed. For the above set of customers, safety matters a lot at whatever cost.
Another thing I noticed is that there are a lot of sub 1 lakh car campaign running by various True value franchisees of different dealers. They're offering a 6 month or even 1 year warranty also. Adding to that the safety doubts in people's mind about Nano, I believe a lot of potential buyers of Nano are settling for a decent sub 1 lakh used car.
I do agree that Nano is really a VFM package, provided it gets a better sounding engine. The 2-cylinder engine is just sounding like one of those mini pick ups and that makes people reluctant of buying it. As a result of all these, after the initial hype, people have started to think against a Nano.
But if TATA has done it, they know well how to make the most out of it. I am sure they'll come up with a tweaked version Nano soon. A better sounding engine plus a couple of cosmetic changes will make it that "cute car" again.
|1st December 2010, 21:44||#10|
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The fundamental flaw.
Although the car is touted to be roomier than M800 but when a family of 4-5 moves, luggage also accompanies them which it has no space for. AC is a forced need in INDIA so with AC, the car feels underpowered. Suddenly one realizes that M800 or Alto is minimum of a car a family needs.
So Nano is not suited for a family. However if the car becomes a 2 seater 3 door with ample luggage space then it will be fun car. Put in 14" tyres ( to increase G.C by at least 1 more inch) and preferably equip it with a removable top. It will be lapped up by adventure travelers, fun seekers and will be bought as second car by many. The price should remain within 2 lakhs.
|1st December 2010, 22:06||#11|
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I think the issue here is the mindset of Indians.We are a fussy lot when it comes to buying things.
In todays India,it is not that the bottom of the pyramid is the biggest market.We are an aspirational lot.If are going to buy something we will not be going automatically to the cheapest thing as a first buy but will wait untill we can buy something decent.
If you look at FMCG and consumer durable companies,the bulk of the sales come from mid to premium products.LCD sales have skyrocketed past flatscreens and curved screen tvs are almost existent.But there is still a 100 million households that are still without a TV,so that means there should be a huge market for a good,durable,cheap curved screen tv?No there isnt.
Remember the Bajaj BYK?The cheapest bike?It was a flop.
Thats the first problem.People are shunning the Nano,because they think its cheap,its meant for others.Metros are thinking its for tier 2 cities,tier thinks its for tier 3 thinks its for the farmer in the countryside.I dont want to be associated with such a cheap car,thats the mentality.
(PLs absolutely no offense meant to the product,its just an analogy)
Secondly,in India there is a massive income disparity.There is a steep drop from what is known as middle class to lower class.The middle class is aspirational and the lower class cant afford a bike let alone a nano.
Majority of Indian rural areas still survive on a pittance,less than 5000 ruppes a month.How can they afford to pay the same amount as EMI for a nano?
The car itself i believe is amazing,a fantastic piece of design and i am extremely proud of it,but i dont think it will be the game changer it was meant to be.Because somehow i think it does not belong in this era,it would have been a success if it was launched say 15 yrs back.
Last edited by avishar : 1st December 2010 at 22:17.
|1st December 2010, 22:16||#12|
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My few paise/rupees on what went wrong, even discounting NVH issues and design faults like no LHS mirror, sealed hatch, heated rear seats etc
1) Indica might have gotten a second chance with jingoistic pride sweeping the nation, in today's scenario most people were
a) Waiting to say here we go again, only Nano v2 will be relatively bug free so not worth buying before 1.5-2 years
b) Convincing everyone and their uncles to either cancel the bookings or put on hold
and TML did play right into their hands
2) How many of the current owners were really from the target audience ? I guess most aspirants were thwarted by high rates for loans even if they did approach the banks. I guess the banks wanted to make a killing.
3) Tata should not have let the fire issues get out of hand, I would blame the regional offices/dealers for slackness. In any case a recall was a must, it is still not too late.
4) Lastly, why build Sanand, that for me was an ego decision, coming from a man I admire very much. To whom did he have to prove a point ? So what if Singur did not materialise, they could have survived out of Pantnagar for a couple of years, may be three, wait for things to pan out. Now the over capacity looks really foolish.
How to go forward now:
1) Immediately recall all cars and make a thorough check, not your usual *** check, but people from the factory who made the analysis.
2) Run a country wide road show (like Toyota have done to promote the Etios), explaining what the problems were and how they were fixed.
3) Reach out to the people who cancelled their bookings to find out why - was it low confidence on the product or was it because of finance, try to address that
4) Start offers like Mercs, guaranteed price after 3 years
5) Make a goodwill gesture to all the owners whose cars burned down - any other car from the stable at a price adjusted against the Nano. (they might have received insurance, but still)
|1st December 2010, 22:29||#13|
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Flawed Marketing - Positioning
It's utterly shocking to see the Nov Sales figure of 560.
In my view, it's about flawed product positioning. When you have a product that is tagged to a price and you market it as an ultimate VFM / cheapest car, you want it's first customers who treat them as it is. What I mean to say is, instead of making Nano available in select "cities", they should have made it available in Tier 2 and Tier 3 cities first. This way, it should generate an initial impression from your real target customers who value the price competitiveness and it's USP rather than people in Cities with 1/2 cars already in the fold. Unfortunately, at the moment, it has caught in the image block and negative media frenzy.
However, I feel (and hope), it will come out of that when it reaches the smaller towns and villages. I don't think, It's too late yet. Remember, Sholay did pretty ordinary in it's few few weeks before it picked up the steam.
I think many of the Indians will be sad if Nano fails.
|1st December 2010, 22:30||#14|
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And as per Nano, I really pity the car. So much effort, time , money on part of Tatas going down the drain. There is a way out. They should sell the whole plant to Honda or Toyota and suddenly we will have queues from here to Moon. Suddenly, the guy who says Nano sounds like autorickshaw would say it sounds like a Ferrari.
|1st December 2010, 23:22||#15|
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1) As said ,General mentality of owning a cheaper car ,many of the people to whom i talked consider nano as inferior to an M800.
2) Looks.It is cute but looks cheap .(but can't give it upmarket looks)
3) Small. Most people thinks bigger car is better. why ? Status symbol.
4) Brand image
5) Sounds like a 4 stroke autorikshaw not like a car.
6) Its expensive to run, It can't replace a HeroHonda or a TVS which gives 65kpl.
7) Many people who can afford a Nano will buy an Alto or an M800 or a second hand small car .Financiers helps here.
8) No boot space.Where will the shopping bags go?
Last edited by bullboy : 1st December 2010 at 23:25.
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