Under Tata Motors, Jaguar Land Rover booms while Tata Nano dooms

Tata Nano | Mark Spencer | October 23, 2011 at 5:50 PM

Tata Nano stack Under Tata Motors, Jaguar Land Rover booms while Tata Nano dooms

That the ones who drew Jaguar Land Rover out of troubled waters, have themselves landed into quicksand with their Nano is something that has perplexed the entire automotive world. The company in question here is the Tata Group.

Ford, the then owners of JLR had put the two iconic British brands up for sale with the Tata Group emerging as the winning bidder in 2008, a move that cost the Indian conglomerate a USD 2.3 billion. However, the move had been forecasted by many in the financial and auto world as one that was a sure doom given the lack of cohesiveness between the companies in question as well as the poor financial state JLR had been at the time.

However, in a development that surprised many, JLR turned out to be one huge profit making one with Tata Motors making US$1.7 billion in the 2010-2011 financial year ending March 3. The project had made a paltry US$79 million in the previous year. Tata Motors then went on to expand their market base for the JLR to Russia and China also last year thereby increasing sales by 26 percent.

All this against the depleting sales of the US$2500 Tata Nano and this presents a picture of startling contrast. Especially so given the immense expectations that the ultra cheap Nano had started out with, with many having predicted it as a sure-fire success in India.

Tata Motors had initially planned to be able to sell half a million of the Nano cars every year. In reality, the company could however only reach 100,000 unit mark till now with sales having started in 2008. The sales have dropped to below 47 percent in September this year on a month to month basis.

Many a reasons can be attributed to this low performance, like delay in the initial production and then lack of dealer network especially in the rural areas whose customers were supposed to be the main target group for this vehicle. And then there has been the case of the vehicle catching fire which has further added to the company’s woes.

There is also a factor that has been brought out by people from rival car making companies in which they say that Tata had not gauged the Indian psyche properly. Something brought forth in the statement: “Nobody wants to buy the world’s cheapest car.”

To boost the JLR project, Tata had brought in experts from outside the company to suggest measures. Unfortunately, the Nano was never accorded such attention and this very loose manner of handling the project is the cause for its poor showing.

Tata has taken up some of the issues like setting up financial options, setting up dealers in the rural areas as well as a changed advertising campaign, but experts yet believe that the company must get outside help to resurrect this flailing project.