Future for Ratan Tata's dream project, the Tata Nano seems to be staring down the barrel of a gun as it struggles with dismal sales and growing heat within the company. Widely considered to be the Rs 1 lakh car or the car that two-wheeler buyers could buy is not even being produced in four digit numbers in an entire quarter, let alone the sales to customers. Recently, the Nano project again came under fire as Cyrus P. Mistry recently released an official statement in response to some facts in the 2017 Annual Report of Tata Motors. In his statement, Mistry said that while the Nano was a brave project, it didn't gain success due to many reasons. During his tenure, he tried to improve the product with features such as an opening tail gate, power steering, and AMT but none of them were able to put the Nano on the road to success. Mistry also stated that since these moves did not bring the desired result, a unanimous decision was taken to discontinue the Nano about one year back. A source close to the development in Tata Motors said that out of the Rs 280,000 crore revenue of Tata Motors, only about Rs 9,000 crore comes from Passenger Vehicle business and of that Nano contributes a very small amount. While Tata Motors might take more time to shut down the Nano production, here's how it can make a successful small car again and fulfill the aim that Nano was made for – safe and affordable transportation for masses.
Axe the Nano brand first
The first thing that Tata Motors should do is to say goodbye to the Nano brand altogether and limit its losses in the project. The reason for this is simple as the Nano brand is synonymous with failure for most people. So trying to sell even a great car as Nano wouldn't yield positive results. It's almost like trying to swim with a heavy rock tied to your feet. Sales and production numbers further testify the failure of Nano. The company didn't even produce 1,000 cars in three months of April to June 2017. What's surprising is that despite such a dismal performance, the Nano isn't a bad car at all and is impressive actually on many accounts such as space, safety and manoeuvrability. This clearly shows that Tata should get over legacy issues and stop making the Nano and simply relegate it to the company's history books. Even if the country's best-selling car were to be sold as the Nano, its sales would simply plummet.
So how to make the Nano successful?
Actually, no one can due to the issues discussed above but the objectives that Tata Motors set out to fulfill with the Nano can still be met. The only way to do is not by competing with Maruti Suzuki and Hyundai but by simply leapfrogging them and entering an area where its competition is still in a nascent stage. Light electric vehicles are the only one such area where Tata Motors could take a lead with an all-new small electric car. The company already has the manufacturing plant in place and also has a supply chain that could come in handy for a small car. Yes, having an electric powertrain would mean that one will need to get a new battery and electric motor supplier among others but there are already global suppliers with cost-effective tech almost ready.
This is where the TAMO came in as a great news as the company announced it would streamline its platform strategy and only have two modular platforms. Later, Volkswagen Group through Skoda was expected to enter a partnership to co-develop a modular platform but as most of you would know it, the deal was recently called off. This means Tata will now either have to develop the platforms on its own or look at finding a new partner. A modular platform is key to the company's passenger vehicle business and the company should act quickly on it. Such a platform can ensure multiple electric vehicles across segments, which could increase volumes, bringing down the battery cost. The opportunities don't end here since the recipe of a good and affordable small electric car hasn't been perfected yet globally. If Tata Motors can get its act together in this area, the company will also get access to numerous markets for exports and these added volumes could further bring the cost down. The Nano can serve as a good basis for a new small electric car that can truly be a global success story.
Tata has showcased the Pixel concept earlier and that's a brilliant place to start from. I'm sure Tata is working on something similar as we speak but they need to ensure they do it in time and get over with the Nano saga altogether. If the company can get a head start over the competition in the electric vehicle domain, the long-term gains could be great. Pushing further my belief is the Government's push for fully-electric personal mobility by 2032. Realistically, the plan might not be 100 % successful but even if it succeeds partly, we're talking about millions of new electric cars and I don't need to explain what kind of advantage would a first-mover have in such a situation.
Taking on Maruti or Hyundai in the entry-level segment is going to be more than an uphill task for Tata Motors. The opportunity hence lies in the small electric car segment and if Tata can leverage its vast supplier network and design a good package ahead of the competition, there are multiple reasons to believe that the vision and objectives of Nano can become successful, if not the Nano itself.