The 2008 is one of most unforgettable year in human history, global economy collapsed, unemployment became out of control, banks were close to be bankrupted! And Indian economy boosted. I studied economics in undergraduate and I do know that, this does not sound normal, in terms of economics! The whole world is collapsing and a country, which has an open economy is boosting. Unfortunately, I don’t know the global economy that well to discuss about the India’s condition in 2008 economic crisis. But I can talk about the Tata Nano.
Tata Nano was on the cover of newspapers in 2008, besides economic crisis news. Tata was trying to introduce the world’s cheapest car, which only costs 100,000 rupees (€ 1600). It sounds really crazy, you cannot even buy a proper laptop for this price and you will have a car with four doors, four wheels and an engine. Actually, Tata made it thanks to state of art engineering and working with the best supplier in automotive industry. They manage produce the world’s cheapest car but with a little bit more price due to raw materials. Honestly, I am not shocked with that. It was very obvious that, cheapest won’t be immune to raw material prices.
The shocking thing was the target group. This vehicle designed to be used by poor people in India, whom cannot afford to buy cars but using motorcycles. Unfortunately, things did not go as they planned. Rich people in India bought the Nano as the backup car, because it was extremely cheap to use. You don’t have to worry about anything, because it was so cheap. On the other hand, poor people still drive their motorcycle. When I first read this on newspaper, I did not believe and ask my Indian friends and they said the same thing, mainly rich people bought the Nano.
The main problem is the relativity. For rich people, Nano was extremely cheap, just slightly more expensive than their Apple MacBook Pro laptop. And it was a descent car to drive for daily. However, for poor people it was still expensive and a huge question mark. Firstly, it was not a motorcycle and more expensive to run than a motorcycle; this may not be true but a car always has this perception. Secondly, it was more expensive than a motorcycle; the gap may not be huge but for people who are living in a limited budget this gap can be a huge gap to overcome. Lastly, having a car means more maintenance cost; their owners cannot fix it in local workshop because it is under warranty and that’s a huge problem for them. Their motorcycle is very cheap to service and they don’t worry about that! But service of a new car is always a worry for people, regardless of their income. And when you consider the target group of Nano, that’s a really big decision and quite big risk.
I am sure that Nano will succeed in global markets, because it is really cheap and looks good. For that price, you can only buy a really bad looking Asus laptop! And Nano is much better than an Asus laptop :) I guess the global sales will make Tato really happy. Regardless of its sales performance, Tata Nano is placed its sales in automotive history. One hundred years later, it is going to be placed in technology museums as a ground-breaking vehicle for its time.