Nano-maker hopeful of gradual pick-up in sales

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Sep 12 2011, 07:32am hrs
After the sales from its most ambitious car project Nano plummeted almost nine-tenth in a span of five months since the start of the financial year, Tata Motors has its job clearly cut out.

The company feels that its true potentials are yet to be clearly understood.

Managing director (India operations) of Tata Motors Prakash Telang, who was given an additional role on the board of the company on Friday after the resignation of the companys global CEO Carl-Peter Forster, told FE that though the product may not have taken off radically it fitted the companys long-term vision.

He also hinted that Tata Motors could soon showcase the worlds cheapest car in the markets of Africa and Latin America, though he did not give any tentative time line for it.

Nano is a path-breaking vehicle. If you make a path-breaking vehicle like that sometimes people dont 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 cant work since three-wheeler vehicles can turn around itself and its cheaper to acquire. It is doing reasonably well (now), Telang said.

He added that the company had a long-term vision with the Nano which would reap its benefits gradually. 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, he said.

Since the start of the financial year Nano sales have been declining sharply. While in April the car set a new milestone selling over 10,000 units, in the subsequent months the sales have been steadily nosediving. In August, the company could only sell 1,202 units.

In a statement Tata Motors had said that the Nanos manufacturing plant at Sanand faced a temporary suspension in production for about two weeks. Lower production, industry sources say, is prompting the company to expand its exports. The company started exporting Nano in April. In the last five months Nano exports have reached 1,125 units. 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, he said.

He also ruled out introducing a Nano electric for the Indian markets any time soon. 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 iron battery vehicles would become more expensive, he said. He added that the Nano in its current form was cheap and affordable. I am sure Nano would also do extremely well. Its a small and intelligent vehicle, he added.

This is not the first time Nanos sales have declined so sharply. Last year when car sales were consistently clocking a growth of 20% plus the sales of the Nano had crashed to just 509 units in November. This prompted the company to hold a vendor meeting on December 8 to reassure that Tata Motors was working on a new branding and advertising strategy to spruce sales.

As per estimates shared, the company was targeting sales of 15,000 units per month. Though the car could not reach the sales target, from December 2010 to March 2011, however, sales of the Nano showed a remarkable turnaround reaching 8,707 units in March before crossing the 10,000 mark in April.

But the sales of the car in the new financial year have gone way off target. A key supplier of components to Tata Motors told FE, 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, he said on conditions of anonymity.

Leader of automotive practice at PricewaterhouseCoopers Abdul Majeed 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. He added that the companys strategy to diversify exports could also help reach the optimal volume for the car.