Tata Motors: Moving on from the Nano

Tata Nano, the world’s cheapest car, in a New Delhi showroom in April 2009. Sold at ₹100,000 ex-factory, the Initial bookings stood at 200,000 units and Tata Motors collected ₹2,500 crore. The company announced plans to stop production in 2019 and the last car was delivered in 2020 Image: Abhijit Bhatlekar / Mint via Getty Images

At the March 2009 launch of the Tata Nano, the number of people who expected the car to bomb stood at zero. Instead, concern for India’s leading auto company was centred around the expensive Jaguar Land Rover acquisition and the global financial crisis that had caused sales to crater. The Nano was widely expected to act as a ballast to cyclical truck sales.

The launch party at Mumbai’s Taj Mahal Palace Hotel gave further credence to the view that the company’s time had arrived. Despite its global footprint, Ratan Tata saw the company for the Indian consumer first. Later that evening, Ravi Kant, the then-managing director, announced the Nano’s price at ₹100,000 ex-factory. (The car was to be initially made at their facility at Pantnagar in Uttarakhand.) Initial bookings got off to a flying start and stood at 200,000 units.  Tata Motors collected ₹2,500 crore and it was a clear case of ‘well begun is half done’.

But the initial boost proved to be short-lived. According to Hormazd Sorabjee, an auto expert who tracked it, the car was a marketing failure. “It should have been marketed as a smart entry-level car and not as an upgrade to a scooter.” The car was spacious and had a lot going for it, but people didn’t want to be seen associated with something that sold for its price alone. After a few years of desultory sales, the company announced plans to stop production in 2019. The last car was delivered in 2020.

In hindsight, the loss of the Nano proved to be a blessing in disguise and allowed the company to focus on its two most profitable franchises—the truck business in India and Jaguar Land Rover. Both were run independently and allowed Tata Motors to post stellar results in the last 15 years. As a result, its stock price has compounded at 41 percent a year over the last five years taking its market cap to ₹383,000 crore. The business is now the second-most valuable in the group behind Tata Consultancy Services, but ahead of Tata Steel and Titan.

Also read: How Tata Motors defied the odds to emerge as India's third-largest carmaker