HOW TATA NANO BECAME THE CHEAPEST CAR IN THE WORLD (2024)

Every automaker in the world wishes to make a revolutionary innovation that will change the automotive industry or at least a part of it.

Vehicle manufacturers don’t just make cars and hope they sell; they make them with the intention of carving themselves a niche that is unassailable by the competition. The Mini is probably the best example of such a brand; widely regarded as an affordable, well-performing car that is fuel-efficient & has a large capacity.

Well, Ratan Tata got into the act too, and manufactured a car in its own class with little competition. The TATA Nano was manufactured and marketed as the cheapest (in terms of Open Market Value –Read about the other cost that goes into owning a car in Singapore) car in the world. Believe it or not, it just about beats that of a motorcycle (<$5, 000).

TATA Nano’s Inception

Mr. Ratan Tata told a press conference that in around 2003, he looked around saw many motorcycle owners who couldn’t afford a car. He felt bad when he saw a family of five perched on a motorcycle or a lady in a sari seated sideways on a two-wheeler cuddling a baby. He feared for their safety. So he made a promise to himself; he would be at the center of designing a car that was cheap enough for the vast majority of Indians. His dream was realized in 2009 with the release of the TATA Nano. This was going on while his company was acquiring the Land Rover and Jaguar Marques.

The cheapest car in the world

As the name suggests, the car is tiny, but the size is a very small part of its price. The Tata Nano became the cheapest car in the world because of the frugal engineering and thrifty innovation of the designers at TATA Motors. They made a car that fit function in a small frame, and despite the low price, safety was not compromised. As Ratan said, he wanted to make a car that provided a safer way for middle-class Indian families to traverse the roads of India with.

The most determining factor in the low price, however, is the cheap labor. Many automakers around the world have claimed it is impossible to manufacture a practical $2000 car. Well, they don’t have the cheap labor found in India. What factory workers in India earn is just but a fraction of what the European counterparts earn, hence paving the way for cheaper cars.

The origin of the cheap car tag and the subsequent backfire

HOW TATA NANO BECAME THE CHEAPEST CAR IN THE WORLD (3)

TATA Motors was very proud of its new invention and didn’t miss a chance to tell people it was the cheapest car in the world; advertising it as the ‘one-lakh-rupee’ car. The people propagated the tag, and it caught on. This kind of marketing was meant to make the car more appealing to low-income earners, but it proved to be its undoing. Unknown to TATA, gone were the days when the “cheap is better” mantra was pre-liberalized. It was the onset of the country’s romance with prestigious brands, so many young professionals viewed the car as a sign of poverty. The aspiration value, as well as the desirability quotient, disappeared with the “cheapest car” tag, and the car never lived up to its initial hype.

Ratan Tata later confessed that the marketing was incorrectly done, and should have instead been directed at the motorcycle owners as a safer way to navigate the perilous urban traffic.