Fizzling Sales in India for the Tata Nano, 'The People's Car'

NEW DELHI -- Tata Motors, makers of the Nano, the world's cheapest car, is announcing disappointing sales of the inexpensive four passenger car designed for the emerging middle class of India. In November, just 509 Nanos were sold, despite brisk sales for more expensive cars. Mercedes sells more than 500 cars a month in India.

After a brisk launch, with nearly 10,000 units a month sold in June, July, and August, sales plummeted when stories of the Nano catching on fire began to circulate. Nano customer Ravindra Bhagat, whose Nano inexplicably caught on fire, is quoted in the Economic Times of India, saying, "Though I received complete compensation for the car, I lost faith in the product."

The target market for the Nano is motorcyclists and others who don't have the means for a more expensive car. Toyota has recently launched a low-cost car, the Etios sedan (three times more expensive than the Nano) in its bid to grow its market share in India from three percent to 10 percent. Other Indian car-makers are focusing on the low-end of the car market as well. The Nano's low-cost innovations include using 3 lug nuts to secure the wheels instead of 4, reduced use of steel, a single wiper blade and side view mirror, and a trunk that's only accessible from the inside.

Tata motors promises to resolve the immolation issue and is aggressively building local sales centers to help familiarize first time car-buyers with the car-driving experience while creating financing mechanisms that are appropriate for buyers with few assets.

When the Nano was launched, many environmentalists publicly bemoaned the Nano's potential effect on the Indian transportation sector. But while the Nano has not yet proven to be the car which democratized driving, tens of millions of Indians will undoubtedly be joining the car-driving West in the near future.