Mini Cooper and Tata Nano: Two Sizzling Cars that are Just Smokin’!

Mini Cooper car on fire.
The Mini Cooper: Not exactly "sizzling" in the way their owners would like.
Tata Nano vehicle on fire.
Tata Nano: One smokin' vehicle.
The news that the National Highway Traffic Safety Administration is investigating complaints of engine fires in Mini Cooper “S” auto models from 2007 and 2008 reminds us that the “explosive” popularity of small cars is sometimes accompanied by “smokin’” performance of a completely different nature.

The Mini Cooper’s engine fires have resulted in blazes that can destroy the entire car … and some of those fires happened after the vehicles had been shut off. Owners of the Mini Cooper, Cooper Clubman and Cooper Convertible, you’ve been fairly warned!

Hopefully, the findings from the NHTSA investigation won’t be as crippling for the Mini Cooper as similar investigations of the Tata Nano car in India. That vehicle burst on the scene in 2009 to breathless praise from all quarters, ranging from top industrial designers to leading consumer advocates.

With a base price of just $2,200 – lower than any other car in the world – along with noteworthy styling that had the design world abuzz, it was an irresistible story of the confluence of value engineering and design chic.

Until the car’s engines starting catching on fire.

Tata Motors has been frantically working on the problem in recent months, adding new safety features to the Nano (now dubbed the “Tata No-No” by more than a few industry observers). The manufacturer has also extended the car’s warranty to four years and is offering big discounts and cheap financing to maintain sales levels.

Nevertheless, the company has seen monthly unit purchases slide by more than 80%. It’s certainly a far cry from the heady days of 2008 when the Tata Nano won the prestigious Innovation Award in the Transportation category and was the toast of the design world.

Will the Mini Cooper follow the Tata Nano into automotive ignominy? Likely not. But it’s a huge black eye for a car brand that’s been nearly immune from criticism – at least until now.

One thing’s for sure: Before this week, no one would have expected the Mini Cooper and Tata Nano to be spoken about in the same breath. Now they’re the Bobbsey Twins. And that has to be really bad news for the Mini Cooper.

The Limits of Delivering “Cheaper Value”

Nano vehicle

Tata Nano car on fire
Tata Nano ... Tata "No-No"?
About a year ago, the international press was abuzz about the latest new “value” entry in the automobile business. Amid great fanfare, Tata Motors, part of India’s largest corporate conglomerate, was introducing the “Nano,” a car designed to appeal to India’s mass market.

The Nano, which can seat five people and has a surprisingly roomy interior for its size, carries a base price of only ~$2,200 — lower than any other car in the world — which proved irresistible to families of modest means whose finances had required that they make do with motorcycles or scooters before.

Some 9,000 Nano vehicles were delivered in July, but since then, sales have slowed dramatically – to just around 500 shipments to dealers in November.

How did Nano’s star fall so far, so fast – especially for a vehicle which Tata Motors thought was impressive enough that it planned to introduce it in other developing markets … then Europe … and finally to the United States?

Production delays have something to do with it. But the real problem is the performance of the car. Most alarming are reports that the vehicle can catch on fire, with one widely broadcast incident where a Nano caught on fire and was engulfed by flames on the way home from the auto showroom!

In response, Tata, while denying anything is wrong with the design of the Nano and studiously avoiding any language of “recall,” is offering to retrofit the automobile with extra safety features. It’s also extending the warranty on the car from 18 months to a solid four years.

Will these moves change the impression that the car is more of a “No-No” rather than a “Nano” and move its sales trajectory back into positive territory? Perhaps. But it’s interesting to note that sales of a rival “value” car made by Suzuki – the “Alto” – have now overtaken those of the Nano. The Alto carries a higher base price of $6,200, and yet it posted unit sales of ~30,000 in November, making it India’s best-selling car that month.

[The success of the Suzuki Alto in India is nice news for a company whose cars in the U.S. have been on a downward plunge all this year – with sales off ~42% in 2010 compared to 2009.]

The experience of the Nano and the Alto in India brings up an interesting question: Is it possible to make small, cheap version of products that are significant purchase items and win the confidence of a broad customer base?

To a degree, yes. But there are limits to “how low you can go” in value-engineering a product for performance and safety, below which customers just turn and walk away. (Or, in this case, drive away.)

Moreover, just like the experience of the Yugo or the Trabant, there’s a risk of forming a poor market image that’s impossible to shake off.

And in this particular case, the brand names don’t help at all. It’s just too easy for disgusted consumers to say “Ta-Ta” to Tata Motors and “No-No” to the Nano.