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Abstract
After having successfully launched the low cost Tata Ace truck in 2005, Tata Motors began development of an affordable car that would appeal to the many Indians who ride motorcycles. The purchase price of this no frills auto was brought down by dispensing with most nonessential features, reducing the amount of steel used in its construction, and relying on low cost Indian labour. The introduction of the Nano received much media attention due to its low price. Expectations created for the car during the run up to its production may have been out of proportion with its realized success. A 2008 study, by Indian rating agency CRISIL, thought the Nano would expand the nation's car market by 65%, but, as of late 2012, news reports have detailed the underwhelming response of the Indian consumer to the offering; sales in the first two fiscal years after the car's unveiling remained steady at about 70,000 units although Tata appears intent on maintaining a capacity to produce the car in much larger quantities, some 250,000 per year, should the need arise. It was anticipated that its 2009 debut would greatly affect the used car market, and prices did drop 25–30% prior to the launch. Sales of the Nano's nearest competitor, the Maruti 800, fell by 20% immediately following the unveiling of the Nano.