The Tata Nano, the worlds's cheapest car priced at around $2,000 when introduced in India in 2009, has flopped.
It seems the customers want something that costs a bit more and LOOKS as if it costs more.
The Nano is getting a face-lift, with a stereo, hubcaps and chrome trim, and a higher price. It's even getting a glovebox. A new marketing campaign will make it appeal more to the young.
"The low-cost automotive revolution has fizzled," says the Wall Street Journal. "Selling poorly at home and with exports drying up, the Nano has become a cautionary tale of misplaced ambitions and a drag on sales and profit at Tata Motors,"says the WSJ.
Tata is India's fourth-largest car maker and the owner of the British-made cars Jaguar and Land Rover.
"It turns out that those climbing into India's middle class want cheap cars, but they don't want cars that seem cheap—and are willing to pay more than Tata reckoned for a vehicle that has a more upmarket image," says the WSJ.
Tata Motors has been laying off workers and cutting production. Analysts say without a revival in Nano demand, Tata Motors could cut further jobs next year.
Tata spent close to $400 million developing the vehicle and hundreds of millions more building a factory to make 15,000 to 20,000 of the tiny cars a month.
Sales are now around 2,500 a month, down from 10,000 in April 2012.Tata's September sales in India were down 40% from a year earlier.
One bright spot is Tata's Jaguar and Land Rover unit, bought from Ford in 2008. For the three months ended June 30, profit at that unit rose 33% to £675 million.
In August, Tata sold about the same number of Jaguar XF sedans as Nanos.
Roughly 19 Nanos could be bought for the $47,000 starting price of an XF base model in the U.S. market, the Journal pointed out.