Why Did Tata Nano Fail? Reasons & Full Breakdown

Why did Tata Nano fail?

You know Why did Tata Nano fail, the car which is being referred to as the synonym for “People’s Car”

Why did Tata Nano fail?

Tata Nano, launched in 2009, by the name of “world’s cheapest car” was positioned and made to cater the aspirations of many Indian families, offering them the practical and affordable means of transportation.

Their goal was to make a car available for every Indian household at a very affordable and cheap price. However, it faced a lot of challenges and setbacks that led to its failure in the Indian market. 

(A) Tale of Tata Nano

When talking about the affordable, cheap yet small cars available in the Indian market, which revolutionized the market and automotive industry in India, Maruti Suzuki Alto comes as the first name in the list. 

Tata Nano company profile

However, another player also entered the market years later, which claimed to be the most affordable and cheap car available in the market and it was the Tata Nano. 

You all must have heard of the name Tata Nano, the car which once got a lot of fame and popularity because of its affordable price range and creative design, but all of a sudden faced a series of downfall and collapsed. 

The car stated to be of only Rs.1 lakh price with its launch in 2009, however with time the company raised its prices for the car, which was however not acceptable by the Indian consumers. 

Let’s first look at the company profile of Tata Nano!

Company Name Tata Nano 
Founded On January 10th 2008, officially announced the launch
of the car. 
Launched in the market First Nano car hit the Indian road in 2009. 
Founders Ratan Tata 
Base of the company Sanand, Gujarat, India.
Parent company Tata Motors 
Tagline “Choti Car, Badhe Sapne”
Sales target Targeted to sell 2,50,000 cars every year at its dispatch. 
End of production year After 2018, no Tata Nano car was manufactured. 
Last assembled car & year Only one car was assembled in the production
end year 2018, much lower than 275 assembled cars in 2017. 
Tata Nano Company Overview

Tata Nano which was launched in the market with the target of selling 2,50,000 cars every year at its dispatch, however did not achieve that target, as it only sold around 74,527 units of the car during FY 2011-12.

After that Tata Nano sales declined year by year, and eventually the car manufacturing was shut down in 2018. 

(B) Key Reasons: Why Did Tata Nano Fail? 

Key Reason Explanation 
Perception of price The car was perceived as the cheap and affordable car, which impacted the whole image of the car and brand among the consumers and in the market. 
Features issue The car consists of less features like no left wing mirror, safety control, power steering, etc. 
Safety concerns One of the major concerns that erupted was the safety that the car provides.As there were many cases of Tata Nano cars catching fire and having lots of engine issues. 
No space The car can only accommodate 3-4 people, which results in very less space provided and a least choice for the Indian consumers. 
Ineffective marketing The car was marketed with the words like ‘cheap’ car, which catered it a negative image hindering its abilities to stand in the market. 
Distribution network The car had a limited network of distribution, which restricted its market sustenance and success. 
Competition The car faced tough competition from other cars already present in the market.
Engine Mechanics issue Most of the Tata Nano cars reported to  have engine issues and engine failure. 
Production plant issues The land acquisition issues and reallocation of the production plant of Tata Nano impacted its production schedule. 
Consumer perception Branding Nano with “cheap car” resulted in a wrong perception among the consumers.Back then nobody would prefer to buy any cheap car as it was considered a luxury at that time. 
Lack of service Back then the service of the car Nano  by Tata was ineffective and unpleasing. 
Production delays Manufacturing and production delays resulted in a big issue for the company. 
Reasons of Tata Nano’s Failure

(C) Tata Nano Sales Overview 

Year Sales 
FY 2017-2018502
FY 2016-20177,591 
FY 2014-201516,903 
FY 2013-201421,129
FY 2012-201353,848
FY 2011-201274,527
FY 2010-201170,432
FY 2009-2010 30,000 (approx)
Tata Nano’s Sales Overview

As we see in the above table, the sales of Tata Nano are declining over the years, resulting in the failure of its business. After 2018, the sales number weren’t disclosed by the company and the manufacturing of the car was discontinued.

(D) Challenges Faced By Tata Nano 

Challenge Reason 
Land controversy One of the major challenges and setbacks that Tata Nano faced is the land controversy it had around the land for the factory in Singur, West Bengal. 
Farmers who had given up their land for the factory protested against the acquisition of their land.
The protests turned violent, and the factory had to be shut down.
Production delays As the land controversy erupted, the factory had to be shut down and the company had to shift their base at another place.
The factory was then reallocated in Sanand, Gujarat. 
All this resulted in a lot of production delays for the company. 
Quality issues Many Tata Nano cars suffered from quality issues.
The customers complained reportedly about having several quality issues with the car. 
The pricing model The pricing also affected the success of the car. 
The car was placed at a very low price and was advertised with the phrase ” cheap car”.
This all didn’t please the customers. 
Also the company was not able to make any profit out of the sales of the cars.
Competition There were already many players present in the market.
As the Tata Nano cars entered the market, it faced a rough tough competition from other players in the market. 
The marketing and promotion of the car was however not up to the mark. 
Challenges Faced By Tata Nano

Tata Nano suffered from a lot of challenges and setbacks which catered to the negative attention of consumers as well as of the market towards the brand.

One of the key challenges that attracted most of the attention was the ‘Land Acquisition Issue’ which however resulted in the delay in the production timeline. 

Now let’s have a look at how does the marketing failed Tata Nano!

(E) Marketing Failure of Tata Nano 

Marketing Failure Reason 
Ineffective market analysis The failed analysis by Tata before launching Nano in the market resulted in one of the key reasons behind the failure of the product. 
They didn’t analyze what the market and consumers need before positioning the brand in the market. 
The ‘Lakhtakiya’ phrase The phrase which means “worth a lakh.
The company marketed their car with this phrase as the world’s cheapest car to make it available for all. 
However, the idea didn’t work well for the company. 
The fame The promotions, advertisements, slogans, all catered a lot of fame and hype for the brand.
However, its launch, issues, delay in production resulted in negative points for the company. 
Negative publicity The car fire issues, engine issues attracted a lot of negative publicity for the company. 
Emotional connection Tata Nano failed to build an emotional connection with the customers as its marketing strategy was unable to touch the hearts of Indians. 
The company wants to convey a simple message of having affordable cars for all but however failed to build an emotional connect with the audience. 
Distribution network Tata Nano has a limited availability of distribution channel network, which restricted its marketing. 
Marketing Failure of Tata Nano

(F) Summing Up: Why Did Tata Nano Fail?

As we sum up this discussion, by now it is understood why did Tata Nano fail in the market. Seeing the journey of Tata Nano in the Indian market, reflects the key insights of its business and the factors which contributed to its shut down in the market. 

Note: Want to know about Tata’s ambitious plan with capital foods? To know about it in depth, visit our article, Tata’s ambitious plan with capital foods and organic India acquisition, to know about it in depth.

The absence of a good market analysis, production delays, lack of features, safety concerns, price hype, consumer perception, engine issues, were some of the key factors to its failed status. 

Understanding the breakdown of these key factors provide the valuable insights one should be dealing and analyzing before entering into the dynamics of the automotive industry. 

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Published By: Aashita Singh
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