Tata Motors has said that the Nano, the world's cheapest car that was aimed at luring India's masses away from motorbikes, will be phased out by the end of the year.
The car in its "present form cannot continue beyond 2019," the automaker said.
Demand for the microcar has slumped since its introduction 10 years ago. Tata produced one unit in June, down from 275 in the same month last year. Exports were zero, versus 25 in June 2017.
The expiry of the "people's car," as Tata branded it in 2008, holds lessons for automakers hoping to make it in India: While consumers may be value-conscious, cutting costs to the bone in pursuit of sales is no use if the end result has reliability issues and a tendency to catch fire.
The much-touted Nano hailed as a "milestone in frugal engineering" fell short on safety, ran behind schedule and produced questionable crash test results, despite costing the equivalent of just 2,475 euros ($2,899) in its most basic form at home.
Tata remains hopeful: A spokesman for the group said the Nano "may need fresh investments to survive." Yet the evidence suggests that pursuit of the lowest price above all else was misconceived. A more realistic view is that India is squarely a high-volume, few-models game and consumers are focused on value, which means getting as many features as possible for their money.
Large numbers haven't led to price wars yet, and probably won't for a while. Indeed, India's car market has the brightest profitability outlook globally, according to Nomura Holdings analysts