On a rainy day in November 2003, Tata Sons Chairman Ratan Tata noticed a family of four on a scooter - the father driving it with a young kid standing in the front, behind the handlebars and wife sitting behind him with another child on her lap.
Ratan Tata was moved by this incident and asked himself whether one could conceive of a safe, affordable, all weather form of transport for such a family. And after four years, Ratan Tata turned his dream into reality with the launch of Nano -People's car- in Delhi.
"Today's story started some years ago when I observed families riding on two wheelers, the father driving a scooter, his young kid standing in front of him, his wife sitting behind him holding a baby and I asked myself whether one could conceive of a safe, affordable, all weather form of transport for such a family," Tata said while unveiling Nano in New Delhi.
He said, "This is been referred to as one man's dream and indeed it was."
"This singular observation sparked several provocative questions about the possibility of creating an affordable "people's car". The two-wheeler observation [with the family of four piled on the scooter] got me thinking that we needed to create a safer form of transport," Tata was quoted as saying in The Innovator's DNA - a book written by Jeff Dyer, Hal Gregersen, Clayton Christensen.
Former Tata Sons Chairman Cyrus Mistry on Tuesday called Ratan Tata's brainchild Nano a loss-making project. He also said that any turnaround strategy for Tata Motors required it to shut it down, but was not done due to emotional reasons.
"The Nano product development required concept called for a car below Rs 1 lakh but the cost were always above this. This product has consistently lost money, peaking at Rs 1,000 crore," Mistry wrote in his five-page email written a day after he was sacked as the Chairman of Tata Sons.
Back in January 2008, Ratan Tata made a statement saying that he was aware of a very steep increase in input prices of steel, tyres and various sundry inputs that could lead to increase in final price of the car. However, he went ahead with the initial price of Rs 1 lakh because it was a promise he had made to the people.
"Since we commenced this exercise four years ago, we are all aware that there has been a very steep increase in input prices of steel, tires and various sundry inputs. Bearing all this in mind, I would like to announce today that the standard car will in fact have a dealer price of 1 Lakh only, VAT and transport being extra. Now having said that, I just want to say that that is because a promise is a promise and that's what we would like to leave you with," Tata had said.
Tata lived upto his promise but Nano couldn't. In fact, the sales number was so disappointing that against the installed capacity of 2,50,000 cars per annum, the car factory at Sanand produced only 42,561 cars in two-year period between January 2014 to December 2015.
Nano sales have been dwindling since 2011-12, when it sold 74,521 cars but the sales plunged to 53,847 cars in 2012-13, followed by 21,130 cars sold in 2013-14 and 16,903 cars in 2014-15.
Earlier in 2014, Tata attempted to reposition the brand from a cheap microcar to a 'smart city car' with the launch of Nano Twist but again it didn't work out for the project.
Despite Tata's several attempts to revive the Nano project, including the GenX which had automatic transmission, the sales never took off.
Ever since Mistry called Nano a loss-making project, many have strated questioning the Tata's decision to continue with the production.
However, Maruti Suzuki India Chairman RC Bhargava backed Ratan Tata for his attempts to offer an affordable cars to the masses.
"The intention was a good intention and Tatas tried to fulfil that intention. Anyway we could not have done it. I think he needs credit for having attempted it," DNA quoted Bhargava as saying.