When the Tata Nano, a stripped-down minicar priced at around $2,000, was introduced in 2009, it was marketed as a car that would transform the way aspiring consumers in India and other developing countries got around.
But the low-cost automotive revolution fizzled. Selling poorly at home and with exports drying up, the Nano has become a cautionary tale of misplaced ambitions and a drag on sales and profit at Tata Motors Ltd. 500570.BY +1.34% , India’s fourth-largest auto maker and the owner of Jaguar and Land Rover luxury vehicles.
It turns out that those climbing into India’s middle class want cheap cars, but they don’t want cars that seem cheap—and are willing to pay more than Tata reckoned for a vehicle that has a more upmarket image.
Now, Nano is trying remake the “people’s car,” into the “cool people’s car.” It has given the car itself a face-lift, adding a stereo, hubcaps and chrome trim, raised the price and started a new marketing campaign to give it more cachet.
If the remake fails to boost sales of the Nano, a Tata mainstay, the company’s outlook could be grim. Tata Motors has been laying off workers and cutting production. Analysts say without a revival in Nano demand, Tata Motors could cut further jobs next year.
“This was the flagship product for the passenger-car market. The disappointing sales are a pretty big negative for the group,” said Anil Sharma, an analyst at IHS Automotive, an industry consulting company.