Mumbai: After sales of the Nano floundered towards the end of last year, Tata Motors Ltd has been leaving no marketing stone unturned to win more customers for what’s been touted as the world’s cheapest car. It’s now being sold under the same roof as groceries and other consumer staples.
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The auto maker has tied up with India’s biggest retail company Future Group to sell the Nano through the latter’s Big Bazaar outlets.
About 450 Nanos have been sold through 120 Big Bazaar outlets across the country since 4 February.
Retail ride: A Tata Nano on display at a Big Bazaar outlet in Noida. Ankit Agrawal/Mint
“The arrangement has been in place for over a month now and we’re encouraged by the results so far,” said Sandip Tarkas, president of customer strategy for Future Group, which runs the hypermarket chain that has 150 stores. “There is a convergence in the target audience of both Big Bazaar and the Tata Nano, and we hope to maximize this target match.”
The move is seen as part of a strategy to make the Nano widely available at different access points beyond its dealership network and stem the slide in sales. After having sold 509 units in November, sales recovered to 8,262 units in February.
“Strategically, it makes a lot of sense,” said Surjit Arora, an auto analyst with brokerage Prabhudas Lilladher Pvt. Ltd. “It is a good incentive as the kind of consumers that Tata Motors is targeting with the value proposition that is the Nano are the kind that will shop at Big Bazaar.”
Tarkas said both companies are in discussions to extend the arrangement by three months.
“This began as a pilot project to see whether a car can actually be sold through a hypermarket,” he said. “So far, it has lived up to the expectations.”
The Nano booths are manned by staff from Tata Motors dealerships and the retailer, and feature the car or its cut-out. The Nano kiosks take bookings and financing options are available from the car maker.
“We believe there is synergy in the customer segment being targeted by Tata Nano and the Future Group through their Big Bazaar outlets,” Tata Motors spokesperson Debasis Ray said in an email.
Shares of Tata Motors ended 2.18% lower at Rs1,143.45 on Tuesday on the Bombay Stock Exchange, underperforming the 1.47% loss in the exchange’s benchmark Sensex index.
Prabhudas Lilladher’s Arora said that the financing and reliability problems that dogged the Nano earlier had been ironed out.
“If demand remains robust, the company is poised to hike its production capacity to 18,000-20,000 cars a month in six to eight months at its facility at Sanand in Gujarat,” he said.
Launched in March 2009, the car drew instant international attention, but was faced with production issues.
Tata Motors was forced to move the Nano factory from Singur in West Bengal following an agitation over land acquisition. Before settling on Sanand, the company had to make Nanos in the interim at its plant in Pantnagar in Uttarakhand. The Sanand plant started production in June, helping the company clear initial bookings made in 2009.
While the Big Bazaar strategy seems logical, there could still be apprehensions in the minds of prospective customers on safety and reliability issues, said an analyst with a local brokerage, who didn’t want to be named.
Since its launch in March 2009, there have been six known instances of the car catching fire. The latest was in New Delhi in August, three months after a company probe had declared the car “absolutely safe”.
Graphic by Ahmed Raza Khan/Mint