Diesel Nano car coming soon: Tata Motors

Written by Reuters | New Delhi | Updated: Sep 5 2013, 02:48am hrs
Tata Motors NanoTata Motors also needs a new hit car in India to regain its share of the local passenger vehicle market. Reuters
Tata Motors will launch a diesel version of its ultra-cheap Nano car by the end of March 2014, its managing director Karl Slym said, hoping to kick-start demand for the model after years of disappointing sales.

Tata Motors slashes Nano production, signals mega slowdown

Launched to great fanfare in 2009 as the world's cheapest car, the Nano has been dogged by poor sales, which slumped 27 percent in the company's financial year that ended on March 31.

Asked when the diesel-powered Nano would go on sale, Karl Slym said on Wednesday: "The diesel Nano is still (going) ahead, but not launched yet... This financial year".

The Nano contributed about a quarter of Tata Motors sales volumes in the last financial year.

Tata Motors has grown increasingly reliant on its luxury Jaguar Land Rover unit's overseas sales to offset weak demand at home. It also needs a new hit car in India to regain its share of the local passenger vehicle market.

The company, India's largest automaker by revenue, has been adding features to the Nano, including a remote keyless entry, as it tries to revive demand. It is also trying to make it more appealing to younger drivers.

A Nano that runs on diesel - a popular fuel in India thanks to government subsidies - may also help sales.

Rising fuel prices and interest rates and a slowing economy have hurt India's automobile market, with car sales falling for nine straight months to July, forcing some automakers to curtail production and reduce labour costs.

A sliding rupee is also compounding their problems by increasing costs and prompting some foreign manufacturers, such as General Motors Co and BMW, to raise prices.

Slym said Tata Motors was now employing fewer temporary staff.

But he said the weak Indian rupee, which has fallen by almost 18 percent against the dollar this year, was mostly neutral for Tata Motors, thanks to its localisation efforts and exports.

"As far as we're concerned, then it's a fairly even game. So therefore, it's not a painful blow to us, but it's also not a benefit."