It probably seemed like a good idea at the time, but with hindsight Tata's desire to sell the world's cheapest car hasn't quite worked out the way they hoped.

In a nation where many still can't afford a car, the $2,000 Nano was set to be a revolution.

But five years after launch, reports Bloomberg (via Autoblog), the company has sold just 229,157 Nanos in total in India--and is now considering a move upmarket to encourage sales.

If that sounds counter-intuitive, it's all down to how the Nano is perceived in India.

Indian buyers may be poorer than their counterparts in the west, but image is still important. The Nano's inexpense counts against it here, where it's considered a mere middle-ground between India's ubiquitous scooters and actual cars.

Compare the Nano's poor sales to that of its nearest rivals from Maruti Suzuki, the Japanese carmaker's Indian arm. In the year from March 2012 to 2013, that company moved 429,569 of its smallest products, the M800, Alto, A-Star and Wagon R.

All are significantly more expensive than the Nano, but all are more attractive to Indian buyers.

Inspired by the Pixel

Tata Managing Director Karl Slym says imminent improvements will breathe new life into the Nano--and move its pricing closer to that of rivals.

The Tata Pixel concept, shown at the Geneva Motor Show in 2011, is indicative of the direction Tata wants to head with its smallest car.

Where the Nano is a pared-down four-seat minicar with very little equipment and a tiny gasoline engine, the Pixel is much more stylish. It's also better equipped, features an automatic transmission, and India's preferred diesel powertrain.

Nanos start at $2,600 at the moment, with prices rising further for better-equipped models. The company has found that many buyers are actually relatively wealthy, and buying them as vehicles for sons or daughters, or as a second or third car for the family.

Aiming for these buyers and offering peppier engines may put the car beyond reach of the poorest buyers, but the rewards could be much greater.

Indeed, it's at the very top of the market where Tata is making the most money--not from its own products, but those of Jaguar and Land Rover (JLR), whom Tata owns. Profits from JLR contributed 74 percent of Tata Motors' operating income in the year ending March 2012.

The average Indian can't afford a Jaguar, but luxury is big business these days.

And if Indian buyers feel they're getting just a little more luxury in their Nano, then perhaps it'll be a sales success after all.


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