Why Ratan Tata wanted to make Tata Nano, the 'people's car', which cost Rs 1 lakh, even when it only made losses?
In the early 2000s, when Ratan Tata conceptualised the Tata Nano, he had promised to make a car that cost Rs 1 lakh, and despite the higher cost of making it a reality, Tata Motors launched it at the promised price tag as the Chairman had committed to it.
When it comes to Indian cars, the Tata Nano stands out, not just for its looks, but also for its price. When it was launched in January 2008, the funky-looking car cost Rs 1 lakh for its base model, making it the cheapest car not just in India, but in the entire world.
CREDIT: BCCL
Why Tata Nano was sold for Rs 1 lakhs
The Tata Nano was sold for Rs 1 lakh not because Tata Motors was somehow able to make a car for less than Rs 1 lakh and sell it at a profit, but because Ratan Tata had committed to it.
In the early 2000s, when Ratan Tata conceptualised the Tata Nano, he had promised to make a car that cost Rs 1 lakh, and despite the higher cost of making it a reality, Tata Motors launched it at the promised price tag as the Chairman had committed to it.
CREDIT: REUTERS
Concept of people's car
When Ratan Tata first presented the idea of the Tata Nano, it was described as a 'people's car', that would make road travel safer for millions of Indians, who could otherwise not afford to own a four-wheeler for their family.
"What really motivated me, and sparked a desire to produce such a vehicle, was constantly seeing Indian families on scooters, maybe the child sandwiched between the mother and father, riding to wherever they were going, often on slippery roads," Ratan Tata had said.
CREDIT: REUTERS
Tata lost money on every Nano sold
To keep the 'people's car' affordable to the masses, the Tatas went with a price tag of Rs 1 lakh, even though the company was losing money on every unit they sold.
It was also one of the main reasons for the fallout between Ratan Tata and Cyrus Mistry, who in 2016, in a letter to the Tata Sons board members, said that the project was resulting in heavy losses, which peaked at Rs 1,000 crore.
CREDIT: BCCL
Did negative perception kill Tata Nano?
Despite dwindling sales, Tata Motors continued with the Tata Nano until 2018, though at an increased price, until the plug was finally pulled on the 'people's car'.
While the Tata Nano was indeed a revolution, many have since said that the 'world's cheapest car' tag did more damage to its image than it had a positive impact.
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Bobins Abraham is the Assistant News Editor at Indiatimes. He has more than twelve years of experience in TV and digital journalism. An avid student of history and geopolitics, he is a conservationist and environmentalist at heart. He writes on environment, sustainability, human-animal conflict and more.
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