Between April and December last year, just 13,828 Nanos were sold, a decline of 71.9% y-o-y; April, November and December were particularly bad months since volumes were smaller than 1,000.
The product faces challenges though the segment still holds potential. Tata Motors needs to focus on delivering the promise of value for money, communicating with the customers improve distribution and after-sales service. If they get this right, Nano sales ill ride the wave once the market bounces back, PriceWaterhouseCoopers India partner Abdul Majeed said.
The Nano is made at Tata Motors Sanand plant in Gujarat, which has a capacity of 2.5 lakh units but is operating at barely a tenth of that. Since the Nanos launch in 2009, only 2,42,985 cars found buyers, not quite the numbers the company has been hoping for.
Tata Motors created an artificial demand for Nano in 2011 and 2012 when it hit peak sales crossing the 10,000-mark a month. While the company pushed sales at the dealer end earlier, this year it did not pressure dealers as it was not targeting volumes, IHS Automotive associate director Puneet Gupta said. The new leadership at Tata Motors is looking to see how they can innovate , he said.
At the 68th AGM in August 2013 Tata Group chairman Cyrus P Mistry told shareholders the company will continue to invest behind the brand. While the Nano is in the middle of a repositioning from being a car for the lower-income category to targeting the youth with power steering, CNG and diesel variant it could still be a long process to shed the budget car image.
We do not anticipate a major improvement in volumes even with alternate fuel variants. However, steps being taken to improve acceptance should lead to bottoming out of volumes in FY14 and low double-digit growth in the coming years, Edelweiss Securities VP (auto) Aashiesh Agarwaal said.