Mumbai: Tata Motors Ltd, India’s largest auto maker by revenue, is working towards repositioning the Nano as a “smart city car", Cyrus Mistry, chairman of group holding company Tata Sons Ltd, said on Wednesday.

Mistry told the Tata Motors’ shareholders at its 68th annual general meeting in Mumbai that the company was working on a variant of the Nano that would come with a power steering option, improved interiors and fuel efficiency, and will be aimed at young car buyers.

He was replying to a query on how the company plans to change the perception of the Nano being a “cheap car". The car was billed as the world’s cheapest car when it was launched in 2009 with a 1 lakh price tag.

The company will also be launching the CNG version of the Nano later this year.

Sales of the Nano have taken a hit in recent months amid a slowdown in the automobile market. Nano sales plummeted to 6,017 units from 27,625 units in the April to July period from a year earlier, according to the Society of Indian Automobile Manufacturers, or Siam.

At the shareholders’ meeting, Mistry also said Tata Motors was looking at repositioning the Aria, a multipurpose vehicle, and the Sumo Grande models in a move to tackle competition in the utility vehicle segment, in which rival Mahindra and Mahindra Ltd has the leadership position.

In the four months to July, Tata Motors’ share in the passenger vehicle market reached a record low of 8%.

“We have to do a lot on the service front," Mistry conceded, while addressing concerns of shareholders on the service quality of Tata cars. The company is also expanding its network and improving product reliability.

In the commercial vehicle segment, Mistry said Tata Motors plans to launch the Prima range of heavy duty trucks and a new Ultra range of light commercial vehicles. The company has been under pressure because of the economic downturn that has eroded demand for commercial vehicles and increasing competition from newer entrants such as Daimler Commercial Vehicles Pvt Ltd in the heavy duty truck segment.

Tata Motors posted a 23% decline in June quarter profit, missing analysts’ expectations, as local operations turned out to be a drag on the company with the Jaguar Land Rover (JLR) unit ensuring positive earnings, as has been the case in the past three quarters.

The company’s net profit fell to 1,726.07 crore from a year ago, while net sales rose 8.3% to 46,751.26 crore. “We dipped into our reserves for the dividend payout," said Mistry. During the last fiscal year, Tata Motor’s truck and passenger car units utilized 48% of the 1.6 million installed capacity. Its UK subsidiary contributed 76% to the consolidated revenue for the full year ended 31 March.

Tata Motors plans to make an incremental investment of 20 crore for JLR’s India operations, said Mistry.