To kick sales of its ultra-low-cost Nano into higher gear, Tata Motors
Unable to afford a big vehicle to haul crops and fertilizer and unwilling to justify paying two or three times the price for a higher-end car given his limited usage, Pisal was sold on the Nano's cost, fuel efficiency and extended warranty.
Whenever I wanted to visit my relatives I had to rely on public transport or a bike. The car allows me to travel with my family, said Pisal, 36, who bought his Nano in October.
Unveiled four years ago, the people's car made headlines as the world's cheapest car, a safe upgrade for the millions of families who crowd four (or more) onto two-wheelers in India.
But the ride for the Nano has been anything but smooth and many company-watchers said Tata Motors, part of India's biggest business house, has a long road ahead of it to lift sales to its targeted 250,000 a year.
Farmer protests disrupted early production and the first buyers did not get their cars until July 2009. Reports of fires scared away customers, would-be buyers had difficulty securing financing, and the price rose well above its initial 100,000 rupees ($1,878).
Crucially, the car has struggled to find a core market.
There was just so much media, so much attention, that the wrong kind of buyers stared buying the Tata Nano in the beginning, said Ashvin Chotai, managing director of consulting firm Intelligence Automotive Asia in London. Rather than being a functional step above a motorcycle, it became known as a cut-price car, he said.
Tata has taken numerous steps to spur demand, including extending the warranty, stepping up marketing efforts and financing options and expanding distribution to smaller towns.
It recently rolled out a 2012 model that is more powerful, gets better mileage, and has improved suspension and steering.
What Tata has not done is launch a Nano that runs on diesel. Petrol in India costs 56 percent more than subsidized diesel.
Some industry-watchers had expected a diesel Nano to be unveiled this week at the India Auto Expo in New Delhi, the same event where the original made a splash at its launch four years ago.
There is no timeframe because we will give ourselves the time that is required to develop and refine a diesel engine to our satisfaction, Tata Motors spokesman Debasis Ray said in an emailed response to questions.
In December, Tata sold 7,466 Nanos, the most since April, but far from the 20,000-plus monthly pace that would get its plant in the western state of Gujarat running full throttle.
My own take is that the only thing that can change it significantly now from the current level is the diesel engine, which they have been developing for quite some time, said Vineet Hetamasaria, an analyst at PINC Research in Mumbai.
The Nano is the brainchild of Ratan Tata, the car-enthusiast head of the Tata Group, who is due to retire at the end of 2012.
Hailed as a showpiece of innovation spawned from and targeted at the emerging world, the distinctive-looking Nano has a rear-mounted 624 cubic centimeter engine and plenty of headroom, but limited storage space.
Almost from the start, the project was plagued by problems that were magnified by intense media scrutiny.
Tata built a Nano plant in West Bengal, but was forced out in October 2008 by violent protests from farmers. It made Nanos temporarily at another plant while its new factory was built in Gujurat.
Limited early availability meant buyers needed to pre-book and pay for their cars in a lottery, pricing out many buyers. It was initially only available in big cities where many early Nanos were bought as third cars or novelties.
To attract small-town buyers, Tata is building a network of Nano dealers in towns of fewer than 500,000 people. To make it more affordable, Tata offers a down payment as low as 15,000 rupees. It also extended the warranty to four years or 60,000 kilometers.
The share of Nano customers buying a car for the first time has risen to roughly half, the company said.
Another factor affecting sales is that Tata has yet to define the Nano's category. Those upgrading from a two-wheeler get safety and comfort, especially in rainy monsoon months, but give up the maneuverability and ease of parking afforded by a motorbike in traffic-choked cities.
Small wheels make it less-than-ideal for rugged country roads, while a top speed of 105 kilometers per hour limits its appeal for someone who will be driving long highway distances.
On the plus side, the Nano's small size is an advantage over other cars in crowded cities.
While admirers say the car offers good value for money, others say it needs a significant upgrade and will struggle to take off without a diesel version.
I think the Nano has fallen below the radar of many car buyers, said Deepesh Rathore, director-India, ASEAN & Australia Automotive Production Forecasting at IHS Global Insight.
CHEAP VS AFFORDABLE
Rising costs pushed the entry level price up to 140,000 rupees. The more popular top-end model starts at 196,000 rupees. By comparison, Maruti Suzuki's
India is a value-for-money market, it's not a cheap market. So when you are having a product which is available at 20, 25 percent higher price, but this is a proper car, then people would rather go for that rather than this car, said Hetamasaria.
High inflation and slowing economic growth are also working against the Nano. Industry sales are expected to be flat in the fiscal year through March after last year's 30 percent surge. Petrol cars have been hit especially hard.
The auto market in India, where many first-time buyers test-ride cars because they don't know how to drive, is dominated by small cars and provides ample entry-level options. The Nano also faces rising competition from used cars.
Many observers said the Nano's low price was overplayed.
Even at the bottom of the pyramid, for the buyer the car is an aspirational thing, so he doesn't want his car to be called the cheapest car in India, said Rathore.
(Additional reporting by Rajendra Jadhav; Editing by Matt Driskill)