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Asymcar 18: Cars of the People

Why did the Tata Nano fail? What is the future of low end disruption in the auto industry?

What does sharing mean for cars? What are the jobs that spaces in cars are hired for that their makers don’t understand?

Is Elon Musk an Industrialist?

via Asymcar 18: Cars of the People | Asymcar.

  • HM

    I once saw in Belgium a Mercedes Office van that was used by a pair of business men that worked within the “benelux” area. They told a tale of it being more convenient than trains / planes given their work area. If memory serves me well he told me that he got it straight off mercedes but I cannot find a link to it. It was something similar to this http://landjet.com/sprinter/sample_4.html

  • http://twitter.com/matthewwanderer Matthew

    BMW/MINI is the poster child for building a lineup driven by customer surveys and automotive press reviews. It’s almost painful to watch this sausage being made.

  • mikiyas

    Used cars compete with the nano, not only on price, but they also destroy the tata because cars are aspirational purchases. And nobody aspires to but the cheapest of anything.

    • Naren

      Tata Nano is highly popular as a second car for a middle-c;ass family. But, it wasn’t targeted as one. It was targeted as a first car for a low-income family.

      • http://www.asymco.com Horace Dediu

        Surely buyers could purchase the car as a second car, despite the marketing.
        The data (from Wikipedia) tells a sorry tale:

        Nominal factory output is 250,000 units/yr.

        Production:

        FY 2009–2010 30,000 approx

        FY 2010–2011 70,432

        FY 2011–2012 74,527[42]

        FY 2012–2013 53,848[43]

        FY 2013–2014 first half (April to Sept.) 10,202

        Note that total Indian car production was more than 3.9 million units in 2011. As of 2010, India is home to 40 million passenger vehicles. Throughout the course of 2011 and 2012, the industry grew 16-18%, selling around three million units. Furthermore, According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015.
        Tata Nano is producing at 16% of capacity and has less than 2% market share. Surely changing the marketing campaign is an easy step to take relative to the losses the company is suffering.

  • Anon Techie

    Tata Nano has a huge market.

    It was just marketed at the wrong segment, either due to the founder’s (Ratan Tata) genuine and good intention to give affordable and safe transport option to families traveling on two-wheelers (motorcycles and mopeds) or because someone thought, the bottom of the pyramid is underserved and a huge untapped market exists there.

    The correct segment, for Tata Nano to target, is the young Indians from the middle class, where guys often get motorcycles and girls get scooters (because no gear shifting) from parents once they are eligible for a Driver’s License. For both the genders, parents cannot afford a $6k to $8k car (3.6 to 4.8 Lakh rupees), but they can certainly stretch their spending to buy a Nano for their children especially for girls, not just due to safety aspect, but also for the effects of sunlight on skin complexion and hair (both are highly valued in this country of fairness creams and hair products).

    • http://www.asymco.com Horace Dediu

      Your answer does not address the question of why your targeted buyers would buy a new Nano vs. a (probably better) used car? The assertion I made was that Nano could not compete with used cars.

      • Anon Techie

        Based on anecdotal evidence I have (friends/relatives who did/didn’t purchase Nanos):

        1) Those who buy a car for better quality/safety of ride (compared to a scooter/motorcycle), will go for Nano. This group is often concerned about lower cost of maintenance (since its a new car) based on their daily use of the car.

        2) Those who buy a car for any other reason (often, status symbol or when using scooter is not feasible), the car is used sparingly, hence its more attractive to buy a used car that costs Rs 200,000 than a new one that costs 180,000 that is known to the “cheapest”.

        The under 25 upper middle class is a great market Tata Nano was not targeted at (1). In addition to this, the “cheapest car” label, and availability of bigger and more powerful used cars ended Nano’s hopes of being a raging success.

        One other reason that’s often not mentioned as a reason for Nano’s failure was the last minute switch of factory location from east coast to west coast on India (due to issues with the state government on the west coast), which pushed the delivery dates for most of the pre-orders, ended up disappointing many first adopters.

      • mikiyas

        Horace, this thesis may be farther reaching than just the Tata Nano. New but cheap alternatives may not ultimately succeed in any category where a strong second-hand market exists. This is of course limited to those products/goods where the venn diagrams for “expensive things” and “necessary things” overlap, of which cars are a prime example. Houses are another example where people in fact don’t even bother with asking the age or ‘used status’ of a given house (presumably b/c the expensive/necessary equilibrium point is way more distorted for houses than cars). But ultimately, do you think this has implications for consumer electronics products in developing countries (smartphones/smartwatches/tablets)? for instance, offering a premium but used/slightly outdated model of a product may in fact be a better strategy than offering new but cheap products in these countries. what do you think?