As Nano yearns sales traction, marketing mojo’s hard to find

Ratan Tata’s dream car is not exactly on a dream run on India’s roads.

Sales of the Tata Nano have fallen in each of the last three months to close October at 3,065 units.

Dealer inventories at the beginning of November stood at about 17,000 units and suppliers say production is likely to be ramped up only from January.

A cross section of people DNA Money spoke to point towards a variety of reasons for this disturbing production and sales trend of the Nano.

Supply glitches, since production continues to be spread between Pantnagar (Uttarakhand) and Sanand (Gujarat); limited availability of the car — open sales happening in only 11 states — and a perceived slackness in the company’s response to incidents of the car catching fire.

Besides, Nano’s positioning may have also contributed to the problem, with Tata Motors pitching it as a semi-urban and rural market drive.

The two rounds of price increases since July this year have only compounded the company’s problems.

According to multiple sources, Tata Motors curtailed production in September and October while it was trying to find out the reasons for these fire incidents.

Though it has offered customers additional protection in the exhaust and electrical systems of the car, consumer confidence was affected.

A Tata Motors spokesperson did not address most of the queries on Nano sales and production forecast, marketing campaigns etc, but said, “As open sales are expanded, gradually covering the whole country, sales will increase. Now that we have begun open sales, for the first time we are proactively going to those for whom the car is meant.”

Are there brand positioning issues? “The Tata Nano has been perfectly positioned as a car, which is just like any other car but affordable as none other is,” the spokesperson said.

The company has begun to take some corrective measures though. It launched a “2 wheels for 4” scheme recently where two-wheeler owners could exchange their vehicles for the Nano at attractive loan rates and tied up with over 20 banks across the counrty to offer multiple financing solutions for the car.

It is also believed to have begun an ad campaign for the Nano in Tier II and III cities and rural areas.

But how long will Tata Motors take to get traction into Nano sales? An industry veteran the company has to incentivise dealers far more than it is and needs to do more aggressive marketing.    

“How many ads of the Nano have you seen? There are not enough cars on the roads....The Nano needs to be seen and word of mouth has to spread to induce customer enquiries. Tata Motors is working on the industry principle of 3% commission for dealers. On a `1 lakh car, this works out to just about `3,000 so dealer incentivisation needs to be improved. Some dealers are stuck with six-month inventories,” said a source.

A prominent supplier points out that the company had earlier promised daily production of about 700 cars. “But production is only at about 150 cars a day......Tata Motors has assured us that production should improve by January but we don’t know if it will be 300 a day or 750 cars a day....their production strategy is unclear to us.”

The industry veteran quoted earlier says that by positioning the car as primarily a semi-urban and rural vehicle, “Tata Motors has already said it is not proper for city aspirants. How can a company decide beforehand who will buy the car? They need to take note of all this feedback and rework their strategy completely”.

JD Power Asia Pacific’s senior market Analysts Darius Lam agrees that very little advertising has been done for the Nano.
“But Tata Motors is now planning to aggressively market the Nano and the current campaign highlights the affordability of the car when purchased on finance,” he said.

Not just Tata Motors, even some of the global forecasting firms have had to rework their numbers in the case of the world’s cheapest car.

Deepesh Rathore, managing director India of research firm IHSAutomotive, says his firm’s current forecast is for the Nano to touch 2.25 lakh units per annum by 2015.

“At that time, it would still not be the highest selling car in the market. About one and a half years back, we expected the Nano to account for 350,000 sales in 2015. Clearly, our expectations from the Nano have come down.”