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Why buyers reject world's cheapest car

7:54 AM, Apr 15, 2013   |    comments
US Congressman and Republican member of the House of Representatives from Illinois, Aaron Schock drives a TATA NANO car during the US delegation visit at the TATA NANO Plant near Sanand, some 60 kms from Ahmedabad on March 29, 2013. (SAM PANTHAKY/AFP/Getty Images)
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(USA Today) -- Like 99-cent hamburgers or $6 baseball-game tickets, some good things in life are such a bargain it's hard to figure out how they could possibly flop. So why isn't that true of the world's cheapest car?

India's Tata Motors thought it wouldn't be able to make its sub-$2,000 Nano fast enough when it introduced it in 2009. Just the notion of a car that cheap turned the company into a household name -- oh, that move and buying luxury brands Jaguar and Land Rover -- in country where the auto market has been growing at a fast clip.

But sales have been slow lately for the Nano, which is aimed at families that lack cars or use motor bikes to get around. Tata is rethinking what to do next for the follow-on model, Bloomberg News reports.

The car, which completely lacks some of the creature comforts which most motorists simply expect, may get fancier, and hence, a little pricier. Reports Bloomberg: "Indians never really warmed to the tiny, egg-shaped car. The company has sold just 229,157 Nanos since deliveries began in July 2009, and sales in March were off by 86% from a year earlier."

What went wrong? In a country like India, owning a car is a sign of prestige, a signal that a family is breaking its way from poverty into the middle class. A car that is viewed as being too cheap -- a four-wheel motor scooter -- doesn't burnish the image with neighbors and co-workers.

It's not just India. Consider luxury cars in the U.S. Are they really worth paying two or three time more than for a mainstream car? Both mainstream and luxury cars these days share the same list of extras and available features. But status-seeking consumers don't seem to mind luxury pricetags, and luxury cars remain the stars of the showroom.

Every marketer knows that sometimes, as impossible as seems, items can be priced too cheap. A low price may imply shoddy workmanship or an inferior product. In the case of Nano, it sounds like some Indians would have rather gone without a car entirely and saved for the day they could afford one with looks, features and a fancy nameplate that actually appeal to them.

Tata apparently has a fix in mind. Bloomberg says company officials are looking to a concept car shown a couple of years ago at the Geneva Motor Show called the Pixel. As a concept, at least, it had fancy upward swinging doors, an automatic transmission and a fuel-saving diesel engine, all features the Nano lacks.

If it were built, it certainly wouldn't be as cheap as a Nano, but it might have more value in the eyes of consumers. They would be getting more of what they paid for.

(USA Today)

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