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Tata Nano to be Discontinued: Here Is What Went Wrong

Every now and then, a magnificent dream miraculously turns into reality after years of dedication and hard work. The Nano started off as one such dream by Ratan Tata that eventually became reality as an inexpensive hatchback for Indians who commuted every day on their scooters or motorbikes. Those who braved the weather, the pollution, and the risk to commute to work and back simply to provide for their families deserved at least some respite, some soothing comfort.

For most, the Nano would have been their very first Tata car, while for others it was a dream come true. Yet, even though the idea was sound, the vehicle failed to capitalize on the market potential and production has all but ended after sales of the company dropped to extremely low levels.

So, what could have been a great legacy, became one of the most important case studies in brand positioning and effective marketing for the automobile industry in India.

A number of things contributed to the Tata Nano’s failure. But, let’s first look at the small car itself.

The Specifications

The power train was a 624CC SOHC petrol, rear engine and rear-wheel car with a manual gearbox that gave a very commendable 25 kilometers per liter. But, the four-door hatchback’s key selling point was its price.

Albeit more expensive than motorbikes or scooters, it was the cheapest small car available on the market at launch, with more variants on the way which offered more options at a heftier price.

In fact, the manufacturer had employed a number of techniques to keep costs low, including cutting down on all unnecessary parts by:

  • Using just one windscreen wiper instead of two
  • Removing airbags altogether
  • Providing a thinner and lighter spare tire
  • Making the fuel inlet only accessible through the front hood
  • Adding only one wing mirror

This was almost the same as its immediate competitor, the base model of the Maruti Alto 800, which was also more expensive.

The vehicle eventually received a makeover in 2015 and, while the first iteration did not have a rear hatch, the new one did. It also received a facelift. But, this was not enough to draw people back to the Nano and sales kept following a downward trend, until there simply were none left.

Too much went wrong too quickly which made the Tata Nano a failure.

Reasons Why the Tata Nano Failed

The hatchback sounded good on paper, but a number of issues plagued the Nano before production even started. That is where things really went wrong, bringing about the Tata Nano’s failure. Reasons were aplenty but here are some of the major ones.

Lack of Practicality

Two-wheeler’s are a nimble little vehicle that let people navigate through traffic easily, while parking is rarely an issue. The same could not be said about the Nano. So, a major issue with it was that it was not a motorbike.

While it was small, it simply was not small and convenient enough for people who were used to motorbikes. That was a major issue in the Nano’s marketability that the automaker had not even considered.

Also, the Nano was more expensive to maintain than a bike and made car ownership more expensive. The lack of standard features that are usually expected in such vehicles also made the Nano feel cheaper.

Both these differences compared to bikes could have been overcome with a better and safer design as well as a more refined look and feel. It simply wasn’t what people wanted to buy. Car sales in this segment were extremely sensitive to how good a vehicle looks.

Positioning as Cheap

The automaker was under the misconception that the low price would be enough to motivate people to buy the Nano. They did not account for their positioning it as a cheap vehicle which, in India’s markets, translates to low quality. After all, who wants a daily driver that looks cheap and is poorly built?

Simply put, those who could afford a higher end Nano did not want to drive it.

Also, when people are status conscious, they look for things that make them look wealthier than their neighbors and colleagues. While a car sounds like it would be an upgrade from bikes, a cheap one that looks the part will always be shunned and will never be perceived as a means to boost one’s social status.

An older, used sedan or hatchback that was more expensive when it was first launched would have more value for such a market than a new one that was marketed as cheap.

So, bad marketing was perhaps the key reason for the Tata Nano’s failure.

Emotionally Disconnected Advertising

One of the most challenging aspects of marketing a vehicle like the Nano is advertising. A basic rule of advertising is to create an emotional connection or a bond with the audience that makes them want to experience the product. Tata failed to do so with their advertisements for the Nano.

While some TV commercials were fairly good, most of their audiences simply could not relate to what they were seeing on screen. If the bad positioning was not enough, the fact that people also could not relate to the advertisements made things a lot worse.

In a country where emotions play such a vital role in everything, this disconnect spelled doom for the Nano before it even hit the roads. Afterall, why buy an automobile if the car owner can’t relate to it?

Poor Build Quality

One of the most significant problems with the Nano was its safety rating. The manufacturer expected the Nano to receive four stars in the Euro New Car Assessment Program (NCAP) crash test. But, when Allgemeiner Deutscher Automobil-Club (ADAC), a German automobile club, tested it in 2014, it failed miserably. The Nano lacked airbags and proper adult protection. It also did not meet basic UN safety requirements and was not as safe as Tata had claimed and expected it to be.

The Nano was also very lightweight which made it a very bad choice for the usual Indian roads which are not always smooth as silk. That also meant that it felt unsafe to drive because of the simple lack of bulk.

On top of that, several incidents were reported in which the Nano caught fire for mysterious reasons. The company claimed the cause was faulty foreign electrical equipment linked to the exhaust.

To make matters worse, they refused to recall the vehicles with defective equipment and instead extended the warranty period to four years, while offering to replace the supposedly faulty parts in those already sold. Bad customer service also added to making the Tata Nano a failure.

Non-Existent Public Relations

The automaker’s bad public relations did not improve matters. The company simply ignored this crucial aspect and, while everyone focused on how many units caught fire, no one talked about how many were running on the roads just fine. That also convinced the general public that the Tata car was so cheap because the company cut corners in the manufacturing process.

While this would not have been a major issue on its own, when combined with bad marketing and advertising, it became one of the biggest reasons for first-time car buyers to avoid the Nano.

Production Issues

Another major problem that contributed to the Tata Nano’s failure was the long wait time for delivery.

The Nano was supposed to be manufactured in the new plant in West Bengal. Unfortunately, the company could not acquire land for the facility and instead had to start manufacturing from their Sanand facility in Gujarat.

Moreover, the lower production capacity could not keep up with the initial demand and many people simply did not buy a Nano early on because there were not any available.

The Demise of a Dream

The Tata Nano’s failure is a key learning point on how not to market and position an automobile. Bad marketing and public relations for a hatchback that was not well designed and manufactured from the start simply added fuel to the fire. Why Tata Nano failed serves as a case study for future endeavors.

From a novel but faulty idea to a possibly promising reality that never transpired, the automaker simply could not deliver what it had promised and instead gave the people what they did not want: A cheap car that looked and felt cheap and was unsafe to drive.

The very first assumption that people wanted a cheap vehicle resulted in a cascading effect that ended with the demise of the Tata Nano.

It was simply a car that was too expensive for the target market, yet too cheap for those who could afford it.

What do you think made the Tata Nano a failure? Feel free to share your thoughts about the car and what possibly went wrong in the comments below.


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I have founded Flop2Hit, a knowledge hub for entrepreneurs.

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