Is the end of the road near for Tata Nano?
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Mumbai: In March, Tata Motors Ltd sold just 174 units of the Nano, launched with much fanfare in 2009 as a low-cost car that would revolutionize the auto industry.
Is this the end of a car that played a bit part in former chairman Cyrus Mistry’s fight with the house of Tata?
While Tata Motors has announced plans to pare the number of its vehicle platforms to two from the current six, company officials are silent about the fate of the Nano. Executives at suppliers to Tata Motors say the Nano has not been part of any discussions and that orders for parts that go into it are erratic—an indication that the model’s future is uncertain.
“Tata Motors is not taking any decision on the Nano. They are letting it die a natural death,” said an executive whose company makes parts for the Nano, asking not to be identified. This person added that the management’s entire focus is on new platforms such as Tiago and upcoming launches.
The company is non-committal.
“We have a well-defined approved passenger vehicle strategy in place that will look at not only the best way of addressing the segments’ requirements but an overall perspective of the portfolio,” said a Tata Motors spokesperson. “We continue to produce Nano catering to the customer demand in key markets.”
That demand isn’t anything to write home about.
In the year ended 31 March, the Nano’s sales fell 64% to 7,591 units.
Over the past eight years that Nano has been on the road, Tata Motors has done everything it could to breathe life into sputtering sales—from launching attractive schemes to re-positioning the Nano as a zippy, smart city car loaded with bells and whistles to woo young, upwardly mobile buyers. Nothing worked.
Mistry, ousted as Tata Sons chairman in October, pegged the cumulative losses arising from the Nano at Rs6,400 crore.
“The Nano product development concept called for car below Rs1 lakh but the costs were always above this,” wrote Mistry in a 25 October letter to the Tata Sons board, pointing out that “there is no line of sight to profitability for the Nano and any turnaround strategy for the company requires to shut it down. Emotional reasons alone have kept us away from this crucial decision”.
The Nano was the pet project of Mistry’s predecessor Ratan Tata, who took over as interim chairman of the group’s holding company after the former’s ouster.
In its current form, the Nano will not meet advanced emission standards which will be implemented in 2020. Nor is it equipped with advanced safety features that will soon become mandatory. In the near-decade since the car’s launch, say analysts, low cost entry-level models have lost their appeal and customers are trading up to bigger, premium hatchbacks and compact sports utility vehicles of all sizes. The share of small models is expected to reduce further as the new safety norms kick in.
A second executive at another supplier to Tata Motors said on condition of anonymity that the company isn’t investing in the model.
There’s still a market for such a car, though, an expert said.
“There’s potential for a low-cost car that can address the needs of those upgrading from a two-wheeler. But Nano cannot survive in its existing form amid changing buyer preference for small cars and stricter regulations,” said Puneet Gupta, associate vice-president at IHS Markit, a market research firm.