Having sold just 500 of the egg-shaped Tata Nano in November -- compared to the 9,000 delivered in July -- the company on Thursday announced it would extend the car's warranty (including those already sold) to four years, from 18 months.
As Tata has been bedeviled with production delays and fires in some Nanos, rivals like the Maruti Suzuki Alto have gained an edge. The Alto, retailing at $6,200 in India, is now the best-selling car there.
The Nano's celebrated 2009 rollout had prompted other big automakers to propose ultracheap people's cars of their own. But Nano's stall-out could put a damper on plans to see goods and services sold to people of modest means.
Kainaz Amaria for The New York Times
A Tata Nano LX in a suburb of Mumbai. Only 509 were shipped to dealers in November, down from 9,000 in July.
Kainaz Amaria for The New York Times
Deeksha Dhawan, a student, in her Nano LX. Satisfied owners like Ms. Dhawan cite its fuel economy and roomy interior.
Though car sales have shot up across India, because of an economy that is growing at nearly 9 percent annually, sales of the Nano have been falling for the last four months. Its maker, Tata Motors, sold only 509 Nanos to its dealers in November — a stark contrast to the 9,000 it delivered in July. Last year, when media coverage and auto writers’ praise were stoking demand, Tata had orders for more than 200,000 Nanos, which has a list price starting at about $2,900.
But as Tata has struggled with problems like production delays and fires in some of the cars, rival cars like the Maruti Suzuki Alto have overtaken the Nano. The Alto, which starts at $6,200 here, had sales of more than 30,000 in November, making it India’s best-selling car last month.
On Thursday the Tata company announced that it would extend the warranty on the Nano, including those that have already been sold, to four years, from 18 months.
The Nano’s celebrated rollout had helped prompt other big automakers, like General Motors and Renault-Nissan, to announce plans for ultracheap people’s cars of their own for sale in India and other developing countries. Those would-be competitors are still expected to appear in the next two years.
But the Nano’s poor showing could give pause to corporate executives and policy makers, eager to see goods and services sold to people of modest means.
Analysts say the Nano situation demonstrates it may not be sufficient to make cheaper, smaller versions of existing products to win over that broad base of customers. Companies, they say, must also make sure the products are widely available and are seen as safe, useful and alluring.
“The bottom of the pyramid continues to be where the action is,” said Hormazd Sorabjee, editor of Autocar India, a magazine. “But the aspirations of people are moving up. People want to jump into something more substantial.”
That seems evident from the booming car market in India, where total sales climbed more than 22 percent, to nearly 203,000 in November. The most popular cars here are small, fuel-efficient hatchbacks that sell for $10,000 or less. Maruti Suzuki, a division of the Japanese auto maker Suzuki, now sells nearly half of all cars here.
Tata Motors, which is part of India’s biggest business conglomerate, the Tata Group, ranks third behind Hyundai of South Korea, whose top seller is the i10, a small car that starts at $7,800.
Tata, which started as a locomotive and truck maker, has gradually built market share in the car business over the last 20 years on the strength of modestly priced cars and sport utility vehicles. The Nano was Tata’s big bid to shake up the car market in India and then go global — first in other developing countries and then, if all went as planned, Europe and possibly even the United States.
The idea had been to sell the same Indian version of the Nano in other developing markets, but offer a more powerful and costlier version in developed countries. The Indian model is a four-door car that can seat up to five people; its air-cooled engine is in the back, like the original Volkswagen Beetle.
The Nano was the brainchild of Ratan Tata, the chairman of the Tata Group, who told his engineers to build a car that would sell for 100,000 rupees ($2,200) to people who would otherwise be making do with motorcycles and scooters. It is common to see Indian families of four riding on motorcycles with the father upfront, the mother sitting sidesaddle with a baby in her arms and a child sandwiched between them.
But the Nano has been troubled almost from its inception. The company’s production plans were thrown off kilter in 2008 when farmers, led by regional politicians, protested that the state of West Bengal had forcibly acquired land at low prices for a factory where the Nano and its parts would be made. Tata had to relocate the factory to another state, Gujarat — causing it to take more than a year and a half to fill orders for the first 100,000 cars.
More recently, the Nano has been hurt by reports of fires in a handful of cars. In one widely publicized instance, a family was taking its new Nano home from a dealership in Mumbai when smoke started billowing from the back of the car. Soon, the entire car was engulfed in flames. There were no injuries — other than to the Nano’s image.
Tata Motors has steadfastly denied that there was anything wrong with the car’s design or its parts. It has said that fires were caused by “foreign electrical equipment” found on top of the exhaust system. It has offered to retrofit Nanos with extra safety features and has taken pains to say that its offer does not amount to a recall.
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