Ratan Tata’s statement that he does not want the world’s cheapest car, the Rs 1 lakh Nano, to be positioned as a taxi as it could be detrimental to its brand image, has perplexed observers. According to Tata, it would defeat the purpose for which the Nano project was initiated: the focus of his company was to provide an affordable car to a family that currently uses a two-wheeler.
The Nano clearly is intended as a bottom-of-the-pyramid offering — to bring car ownership within reach of the Indian masses. Currently, there are around 60 million two-wheelers on the road and if 10-15 per cent of their owners do migrate to the Nano, this is a market — of a million potential customers — that didn’t exist before. The cachet of this Rs 1 lakh car derives from the patronage of this group.
Will the Nano brand get diluted as a taxi? Does it really matter for a carmaker whether individuals or commercial operators use their models? Tata’s comment perhaps stems from the experience of the best-selling Indica, whose diesel model replaced the venerable Ambassador in cabstands across the country. As the sole successful Indian contender in the Great Indian Auto Race, its brand identity was far from being just a taxi.
However, such concerns are different with the more established global auto giants. Daimler Benz, for one, has hardly had a problem with Stuttgart, the town in which its plant is located, using the Mercedes as a taxi. Toyota, for another, has had its models used as taxis in many Asian countries like Singapore and Hong Kong. Nobody seriously argues that the Benz and Toyota brands suffered as a consequence.
The upshot is that when Tata Motors does get established as a world-class manufacturer, it will get less touchy if its models are used as taxis. Today, it’s worried over the Nano’s brand. Tomorrow it’ll be less worried if the Jaguar is positioned as a luxury cab.