Tata Nano facing booking cancellations

The nickname, “One-lakh car” is due to the Nano’s low price point , near 1,00,000 (One lakh rupees). The Tata Nano is an inexpensive, rear-engined, four-passenger city car  built by the Tata Motors and is aimed primarily at the Indian domestic market.

Tata Motors began selling its “One- lakh car” in March, 2009. The cheapest car in the world today, though the price continues to rise due to increasing material costs, it is an exemplary example of Gandhian engineering, a concept involving deep frugality and a willingness to challenge conventional wisdom.

In 2008 the Financial Times reported: “if ever there were a symbol of India’s ambitions to become a modern nation, it would surely be the Nano, the tiny car with the even tinier price-tag. A triumph of home-grown engineering, Tata Nano encapsulates the dream of millions of Indians groping for a shot at urban prosperity. ”Home-grown engineering” is a relative term here as much of the systems and parts used in the Nano may not have been developed or produced in India.Tata Nano

While the car has sold over 200K units, disappointing November 2010, sales figures have made some rethink current opinion that selling no frills products to the poor will be a winning strategy in the future.

As Tata officials pat their back for getting Nano sales back on track for December, another problem has cropped up. The company has missed its target of selling one lakh Nanos by 2010 by a huge 22,000 units.

The company had selected 1.55 lakh customers in 2009 who were supposed to get their cars in 2 phases. The first phase of delivery was supposed to end by 2010 with 1 lakh customers getting keys in their hand. But many customers backed out of the deal whereas some others delayed their deliveries. As a result, Tata Motors has missed its sales targets for the year.

There could be much reason as to why the customers backed out. Some can blame it on the sporadic fires fiasco, some blame safety issues, some may blame the fact that it’s not a ‘one lakh’ car anymore.

Amidst the woes, Tata Motors is ensuring that the sales figures remain high. They have to do that, it is nothing but a game of mass production and economies of scale. Even a minor drop in sales can damage the entire game badly. To make sure that sales figure touch the sky, Tata Motors recently announced a Pan India launch of the Nano. This is coupled with TV advertisements, ongoing promotions and other such perks to woo buyers.