By Alexandre Bohas
Translation: Davina Durgana
Passage au crible n°50
Announced with a bang by Western media, the Nano was hailed in March 2009 as the car of the emerging world, while others have condemned the pollution that its mass-market production would entail. However, all agreed that this would be the car of the newly industrialized countries, the Model T of the Roaring Twenties. However, it is clear that it has not achieved its expected success.
> Historical background
> Theoretical framework
> Analysis
> References
Similar to the rest of the economy, the Indian auto industry is experiencing explosive growth with over 2 million vehicles produced and the objective to exceed 3 million by the end of 2016. The main player is Maruti-Suzuki, which owns 45% of the market share while Tata – still a giant heavyweight – only holds 12% of market shares. Potential clients are countless: 81 million households with over 75,000 rupees per year. Their purchasing power continues to grow steadily, and they aspire to join the consumer society. In addition, it sells 13 million bikes per year. This is often used as the means of family transport, but they must be gradually replaced.
In this context, the commercialization of Nano meets the expectations of rich Indians. Indeed, at the time by proposing 100,000 rupees (1,700 Euros) Tata computed this model at the lowest possible cost to conquer a preponderant position in this market, and thus dethrone Maruti-Suzuki. With an ambitious objective of 15,000 sales per month, they thus have a production capacity of 20,000 units monthly. They have also begun a strategy of systematic distribution because it wishes to distribute this vehicle in the most rural areas in which the bike is still the most commonly used form of transportation. However, when faced with a decline in orders – the lowest level was reached in November 2010 with only 509 sales – it has lowered its margin to support its points of sales. They then extended their warranty from 18 to 60 months and offered a more efficient engine and more customized options, without recovering a satisfactory level of sales. In fact, with the exception of April 2011, these stated objectives were never realized. Despite the underlying complications of 1) errors in communications and marketing, 2) industrial troubles caused by a poorly placed production site, and 3) shortages incurred in the first month of sales, the most fundamental cause appears to be poor sales.
Socio-cultural Structuring of Markets. Often naturalized by analysts, the markets have not resulted uniquely from an adjustment between supply and demand. In many ways this demand seems to be structured on a social and cultural field. First, it has emerged in a society and in a very specific context. Then, in determining ways, its functioning begins as strongly marked by symbols and cultural representations which determine the desire of procurers and its fixed value.
The Hegemonic Character of the Western Lifestyle. If hegemony is often assimilated to the military supremacy of a State, it is necessary to first remember the socio-cultural dominance of transnational groups.
Too quickly addressed by specialized publications, the cultural dimension of the failure of the Nano seems incontrovertible. In fact, the Tata Group wanted to attract the middle classes of India who wished to acquire a car. In order to do this, they have presented an offer of a very competitive price. While this element has become the main selling point of the Nano, this assimilation of the vehicle to the poor has tarnished its image and discredited the Group’s reputation to potential buyers. Evidenced by the manufactured nicknames of, the people’s car in India and the car of taxis in Sri Lanka, where many drivers of this profession have acquired these cars. However, this vehicle still carries status, and serves as an outward sign of social success, values, “an extension of power… [and] a manufacturer of self ” in the words of Erich Fromm. In this regard, some have often compared the Nano with the Model T, while ignoring symbols of collective representations of freedom, leisure and the embodiment of the modern American sedan. In fact, Western manufacturers thrive in this symbolic aspect. They are based on the use of latent technology, branding a premium, luxury interior and innovative lines that design what Roland Barthes has already perceived, through the Citroën Goddess creations that are “consumed in their image, if not in use by a whole population which appropriates it as a perfectly magical object”. As analyzed by Peter Wells, the Nano has represented to the contrary a challenge to the industry by promoting a Western business model, which focuses on functionality.
However, customers wanted to withdraw from the basic model that accounted for only 20% of sales. They even preferred cars that were up to 38% more expensive. Consider in this regard that it often serves as the second vehicle of the home. In India, buying patterns show the identification of Indian middle classes with the American Way of Life. The latter desire to distinguish themselves from the bourgeoisie, implicitly acknowledging that the European-American companies hold the right to define what constitutes as a legitimate cultural reference. Finally, they are merely reproducing imported practices.
Lastly, this case is highlighting a North-South divide. In so-called North, the car is now considered harmful and polluting and is seen more as commonplace and as a simple means of transportation. To demonstrate this, the Dacia Logan destined for Eastern Europe has created a stir by selling well in Western countries like France where carpooling and self-service car systems are rapidly growing. Also, if the Nano comes to access European markets as it desires, it will succeed against all odds to achieve greater success, even in India.
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