Tata Nano and small car market in India: Why Maruti Alto 800 still leads?

Tata had very ambitious plans for Nano, when they first announced the car back in 2008. They still do, but end of the month sales…

Tata had very ambitious plans for Nano, when they first announced the car back in 2008. They still do, but end of the month sales figures are not promising. Tata had projected around 20,000 to 25,000 units of Nano to be sold in India every month, but Nano has averaged 5,099 units monthly over the last six months. Tata Nano base price today is at INR 1.44 lakhs ($2,584).

Not many can answer for certain why Nano failed to conquer the small car market in India. Its not that people who have already bought Nano are not happy, in fact most of them are more than impressed.  Other than that, India does love small cars, Maruti Alto, India’s largest bestseller (base price INR 2.44 lakhs or $4,379) is an example to go by, it registered an average sales of 20,152 units monthly over the last six months (in spite of shut downs at their Manesar plant). Maybe Tata needs to develop a Nano with 800 cc engine and better features (they might be working already this) and they can continue to offer the current variant alongside.

Future is not going to be any easy. New small cars will be launched. Not only India, demand for small cars is increasing globally, but yes India is the hub. Renault is independently working on two small cars for India which will be launched by 2014 for a starting price of Rs 2.16 lakhs. Hyundai Eon is already fighting with Maruti Alto 800. Hyundai Eon has a base price of Rs 2.75 lakhs ($5,006), and registers about 6,600 units every month.

Other reason behind Nano’s frugal sales can be its famous tagline – World’s Cheapest Car. People usually do not prefer to buy what is cheapest in the market, but something that offers a little bit more, at a little extra cost. Also the Nano fire catching events were not helpful. Last month, AutoCar Pro had reported of Nano catching fire, a first this year, but the page has now been removed. Only time will tell what is to happen of the iconic Nano, till then, we wait and watch what the Indian small car industry has to offer.