India's launch of the world's cheapest car, the Nano, was expected to create a vast new market segment in the nation of 1.2 billion people, but reality has fallen short of expectations.
"We are at the gates, offering a new form of transportation to the people of India," said a proud Tata chairman Ratan Tata at the unveiling three years ago of the globally-hyped vehicle.
Tata, who spearheaded the Nano's development as a way to get India's masses off two wheels and onto four, was likened by some to Henry Ford, who revolutionised the US car market with the Model T.
But the Nano's fortunes have gone into a tailspin with last month's sales of the snub-nosed "people's car" plunging 85 percent from a year earlier to an all-time low of 509 units, despite a rapidly expanding vehicle market.
While the five-seater Nano, which hit the roads with a price tag of 100,000 rupees (2,500 dollars), has battled troubles such as fires in some of its cars and production delays, other small cars have boasted impressive sales figures.
In November, 33,000 of the next cheapest car on the market, the Alto from Japanese-owned market leader Maruti Suzuki, drove out of showrooms even though they cost twice the price.
In an effort to get the Nano back on track, Tata Motors this month offered a " Tata Nano Happiness Guarantee," more than doubling its warranty to four years from 18 months, and throwing in a maintenance contract for just 99 rupees a month.
The company, India's largest vehicle maker, followed up that sweetener with "fast-track" financing for buyers wanting loans to purchase the car, allowing loans of up to 90 percent to be approved in just 48 hours.
The Nano's woes began even before it rolled off the assembly line when farmers in communist-ruled West Bengal state, led by a charismatic opposition leader, protested that they had been forcibly ejected from their land to build the Nano plant.
Tata Motors, which also owns premier British marques Jaguar and Land Rover, was forced to abandon its nearly completed factory and shift to the western state of Gujarat, meaning production of the first 100,000 cars was badly delayed.
Recently, the car's image has been hurt by a series of fires, one of which was replayed frequently on Indian television, showing a Nano engulfed in flames. "Quality perception over safety of the car could be a concern," Mahantesh Sabarad, analyst at Mumbai's Fortune Equity Brokers, said.
There were no injuries as a result of the fires and a company spokesman insisted that the Tata Nano is a "safe car with a robust design."
Tata Motors has announced a free safety upgrade involving new features being added to the exhaust and electrical system. "The car needs a lot of image engineering," said automobile commentator Murad Ali Baig.
Another problem is that the Nano's price has gone up from the nice round launch figure of 100,000 rupees as a result of a rise in input costs, to 137,000 rupees for the basic model without airconditioning.
The cheapest Nano with an airconditioner is 160,000 rupees. "For the price of Nano, there are good second-hand cars on the market with air conditioning," Baig said.
Analysts say that Tata Motors, with its deep pockets, still has the capacity to turn around the fortunes of the Nano, which is just 3.1 metres long but has won rave reviews for its spacious interior.
"The really good thing for Tata is that those people who have the car are happy with it. Word of mouth is a slow process but I still think the car has potential," said Hormuz Sorabjee, editor of India's leading automobile magazine Autocar .
"We are at the gates, offering a new form of transportation to the people of India," said a proud Tata chairman Ratan Tata at the unveiling three years ago of the globally-hyped vehicle.
Tata, who spearheaded the Nano's development as a way to get India's masses off two wheels and onto four, was likened by some to Henry Ford, who revolutionised the US car market with the Model T.
But the Nano's fortunes have gone into a tailspin with last month's sales of the snub-nosed "people's car" plunging 85 percent from a year earlier to an all-time low of 509 units, despite a rapidly expanding vehicle market.
While the five-seater Nano, which hit the roads with a price tag of 100,000 rupees (2,500 dollars), has battled troubles such as fires in some of its cars and production delays, other small cars have boasted impressive sales figures.
In November, 33,000 of the next cheapest car on the market, the Alto from Japanese-owned market leader Maruti Suzuki, drove out of showrooms even though they cost twice the price.
In an effort to get the Nano back on track, Tata Motors this month offered a " Tata Nano Happiness Guarantee," more than doubling its warranty to four years from 18 months, and throwing in a maintenance contract for just 99 rupees a month.
The company, India's largest vehicle maker, followed up that sweetener with "fast-track" financing for buyers wanting loans to purchase the car, allowing loans of up to 90 percent to be approved in just 48 hours.
The Nano's woes began even before it rolled off the assembly line when farmers in communist-ruled West Bengal state, led by a charismatic opposition leader, protested that they had been forcibly ejected from their land to build the Nano plant.
Tata Motors, which also owns premier British marques Jaguar and Land Rover, was forced to abandon its nearly completed factory and shift to the western state of Gujarat, meaning production of the first 100,000 cars was badly delayed.
Recently, the car's image has been hurt by a series of fires, one of which was replayed frequently on Indian television, showing a Nano engulfed in flames. "Quality perception over safety of the car could be a concern," Mahantesh Sabarad, analyst at Mumbai's Fortune Equity Brokers, said.
There were no injuries as a result of the fires and a company spokesman insisted that the Tata Nano is a "safe car with a robust design."
Tata Motors has announced a free safety upgrade involving new features being added to the exhaust and electrical system. "The car needs a lot of image engineering," said automobile commentator Murad Ali Baig.
Another problem is that the Nano's price has gone up from the nice round launch figure of 100,000 rupees as a result of a rise in input costs, to 137,000 rupees for the basic model without airconditioning.
The cheapest Nano with an airconditioner is 160,000 rupees. "For the price of Nano, there are good second-hand cars on the market with air conditioning," Baig said.
Analysts say that Tata Motors, with its deep pockets, still has the capacity to turn around the fortunes of the Nano, which is just 3.1 metres long but has won rave reviews for its spacious interior.
"The really good thing for Tata is that those people who have the car are happy with it. Word of mouth is a slow process but I still think the car has potential," said Hormuz Sorabjee, editor of India's leading automobile magazine Autocar .
