Why the world's cheapest car won't sell

A new car for around $2,000? Sounds like a dream, right? That's what Tata Motors hoped upwardly mobile Indians and people who couldn't previously afford a new car would think when it unveiled the Nano, the world's cheapest car, in 2008.

The company has sold just 229,157 Nanos since 2009 (the company thought it could sell 100,000 per month) and its March sales were down 86 percent from a year earlier.

Sometimes too cheap isn't a good thing. Tata's latest strategy: drop the ultra-low budget image, BBC reports:

The Nano, made by India's Tata group, is being re-positioned as a smart city car following disappointing sales.

"We are now focusing on increasing the features and the perceived value of the Nano with every subsequent model launch," said chairman Cyrus Mistry.

That means, among other things, power steering and an improved interior and exterior.

As Tata's managing director told Bloomberg Businessweek earlier this year, the low-budget car just wasn't filling the niche the company thought it would: "Scooter drivers weren’t attracted because others 'don’t think I’m buying a car, they think I’m buying something between a two-wheeler and a car. Anyone who had a car didn’t want to buy it, because it was supposed to be a two-wheeler replacement.'”

Ditching a design that's clearly unpopular is a smart move with India's car market expected to become the third largest in the world by 2016, though car sales have been declining in recent months.

Photo: Flickr/mjaniec

This post was originally published on Smartplanet.com