Tata Motors hopeful of a reversal of fortunes of its Nano
Things does not seem to going Tata Motor’s way at the moment. Sales of its passenger cars has not been promising off late with its dream project — the Nano seems to be the worst hit. If that’s not all, the Nano has once again started to show its affinity for fire. In fact, sales have taken a skinny dip to the tune of nine-tenth of its projected sales figures for third financial year and all in a span of just five months.
Tata Motors though continue their spirited outlook stating that the people have not been able to fathom the car’s true credentials.
Carl-Peter Forster, the company’s global CEO tendered his resignation last Friday and he has been replaced by Prakash Telang who has been the Managing Director (India operations) till now. Inclusion of Telang into the board would be an additional role for him. His opening statement to the world at large was that the Nano has given the company a long term vision.
That the Nano would find place in the Latin American market as well the African market was hinted at by him without giving any specific time period for that happening.
In his words “Nano is a path-breaking vehicle. If you make a path-breaking vehicle like that sometimes people don’t understand it very well and it takes time. Another example from our family was the Ace (sub-one tone four-wheeler pick-up truck). When it was launched most people said it can’t work since three-wheeler vehicles can turn around itself and it’s cheaper to acquire. It is doing reasonably well (now).”
Nano as per him is a long term project for the company and would give returns in time. He added, “It provides a lot more comfort and its acquisition cost (is low). We have a clear long-term vision and believe that this is the right product for India. It will surely take off. Yes sometimes take off happens radically or takes longer.”
Nano sales have shown a very sharp trend even though it is a downward one. It had started its year with 10,000 units being sold in April of this year and then took a dive with just 1,202 units being sold in August.
The Sanand plant of Tata Motor’s in Gujarat where the Nano is being manufactured has been shut down for two weeks as per a statement from the company itself. They have also started looking at the possibility of maintaining sales though the process of exports. 1,125 units of the car have been exported in the months from April this year. The new CEO states “We are doing step by step with the Nano (exports). At present, we are exporting it to SAARC countries such as Nepal, Sri Lanka and Bangladesh. Logically next would be Africa and Latin America.”
The possibility of an electric version of the car being made available for the Indian market has been ruled out by the newly appointed CEO stating such a version would definitly cost a lot more than the present breed of petrol run Nanos. “Electric vehicles may not be a good solution for India. More than 90% of electricity is generated through coal and fossil fuels. Cost of electricity is also going to be higher and the cost of lithium ion battery vehicles would become more expensive. I am sure Nano would also do extremely well. It’s a small and intelligent vehicle,” is what he added.
Nano has also faced a similar drought in sales in the month of November 2010. That was when the car sales dropped to just 509 units. This specially so against the backdrop of other cars registering a 20 percent increase in sales volume. Tata Motors had then held a special vendor meeting and come out with some new idea on advertising their car.
The company think tanks had placed a figure of 15,000 units as sales for a month. The company never reached this figure though in March of 2011 they did register a sale of 8,707 units and then in April were able to cross the 10,000 units mark.
The new financial year has indeed been a harbinger of bad news for the Nano. This is also quite evident from the fact that auxiliary companies that supply components for the Nano are also facing a drought in demand. “We are having idle capacity at Sanand. Demand for the car has sharply come down. We are now going to supply components to other car makers from Sanand,” said one of the suppliers to Tata Motors at Sanand and requested not to be identified.
Abdul Majeed a leader of automotive practice at PricewaterhouseCoopers said, “Since the price of the Nano is around R1.7 lakh customers feel that they can invest a little more and buy a vehicle in the next price segment.” In his opinion the export strategy is the best bet for Tata Motors.
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