Firstly the defination of the nano as the worlds chepeast car does no go down well with the indian consumers. The word cheap somehow creates a feeling of inferiority. hence ultimately the answer is the positioning of the Nano is not proper.
The nano was positioned as the one lakh car befor it's launch. they sold some cars for one lakh 2 but now the price varies between 1.5 to 2.5 depending upon it's model.Tata has not practised anything to rework it's positioning of one lakh car they are still piggibackin on that postioning of a nano. when customer goes to purchase a NANO he has a thought of a lakh rupees car in his mind but at the time of purchase the price factor which is not something that customer percives it to be makes customer to think twice about his purchase.these customer can switch to chervolet spark or beat whch cost near 3.5