Tata Motors passenger vehicle (PV) sales fell 15% to 3.14 lakh units in FY13 and 37% to 1.98 lakh units in FY14, while commercial vehicle (CV) volumes were down 6% to 4.44 lakh units in FY13 and further down 28% to 3.17 lakh units in FY14.
The Nano factory at Sanand in Gujarat has a capacity to build 20,000 units a month, but rolls out only 1,000-2000 cars. Meanwhile, the company has shelved plans to launch a diesel Nano which was almost fully developed citing high diesel prices that have made the project unviable. With output at Sanand
running woefully below capacity, Tata Motors is planning to build a high-volume model (a new small car based on the X0 platform) here, to help improve the plants viability.
From 2015, Tata will make a new small car at Sanand to replace the Indica eV2, which is over a decade old in design. Priced at R3-4 lakh, this car will compete with models like the Maruti WagonR, a person close to the development said.
A Tata Motors spokesperson said: We have diesel technology that is readily available. Nano remains an important brand and we constantly evaluate the best market-suited variants for it, but given the changing dynamics of fuel pricing in the country, we are not immediately focused on announcing a go-to-market date for this.
Changes are also under way at Tatas PV facilities in Pune. Industry sources said while the Indica Vista hatchback was previously made at the Ranjangaon plant (where Tata holds a 50% stake along with Fiat), its replacement model Bolt is being shifted out to Tatas own plant nearby in Pune.
This move will mean higher realisation on the Bolt for Tata, as it does not have to make payments to Fiat for sharing the plant. However, Zest, Tatas new compact sedan, will continue to be made at Ranjangaon alongside Fiats Linea and Punto models.
Gaurav Vangaal, automotive analyst for light vehicle forecasting at IHS said: Tata had been working rigorously on the Nano diesel project to penetrate the lower diesel segment. If it gets scrapped, its a significant loss to them in the mass segment. Sooner or later, Tata will provide another option in this segment.
Tata Motors is progressively shifting truck production from its Lucknow plant to Pantnagar to avail of tax incentives at the latter site which had been extended by the Uttarakhand government. The Pantnagar facility, which enjoys an excise duty waiver for almost a decade, had originally been dedicated to Ace light CVs and the capacity had been increased to 4.5 lakh units a year from 2.5 lakh units in 2011-12 to meet high demand for the LCV. For a brief period in 2009, it had also made the Nano before the Sanand plant went online.
Lucknow continues to be one of our most strategic manufacturing locations. However, like most large manufacturing companies, we continue to look at best practices and ways to optimise our various manufacturing locations. As a normal business process, these are usually dynamic policies and decisions, constantly evolving to meet business needs of the company, the Tata spokesperson said.
Tata Motors is also continuing with block closures at some of its plants like Jamshedpur and Pantnagar to control inventory levels from getting out of hand. The Pantnagar plant is closed four days every month, besides Sundays. This is being done since December and typically, the closure is in the last week of the month.
Production cuts over the last year have led to significant job cuts across the company. While contract labour positions have been reduced by a few thousands, some 600 more jobs have also been lost among permanent workers, including company executives.
Tata Motors shares closed down 0.28% at Rs 411.20 on Wednesday on the BSE.