Sales stall for world’s cheapest car
India’s launch of the world’s cheapest car, the Nano, was expected to
create a vast new market segment in the nation of 1.2 billion people,
but reality has fallen short of expectations.
Tata, who spearheaded the Nano’s development as a way to get India’s
masses off two wheels and onto four, was likened by some to Henry Ford,
who revolutionised the US car market with the Model T.
But the Nano’s fortunes have gone into a tailspin with last month’s
sales of the snub-nosed “people’s car” plunging 85 percent from a year
earlier to an all-time low of 509 units, despite a rapidly expanding
vehicle market.
While the five-seater Nano, which hit the roads with a price tag of
100,000 Rupees (US $ 2,500), has battled troubles such as fires in some
of its cars and production delays, other small cars have boasted
impressive sales figures.
In November, 33,000 of the next cheapest car on the market, the Alto
from Japanese-owned market leader Maruti Suzuki, drove out of showrooms
even though they cost twice the price.
In an effort to get the Nano back on track, Tata Motors this month
offered a “Tata Nano Happiness Guarantee,” more than doubling its
warranty to four years from 18 months, and throwing in a maintenance
contract for just 99 rupees a month.
The company, India’s largest vehicle maker, followed up that
sweetener with “fast-track” financing for buyers wanting loans to
purchase the car allowing loans of up to 90 percent to be approved in
just 48 hours.
The Nano’s woes began even before it rolled off the assembly line
when farmers in communist-ruled West Bengal state, led by a charismatic
opposition leader, protested that they had been forcibly ejected from
their land to build the Nano plant.
Tata Motors, which also owns premier British marques Jaguar and Land
Rover, was forced to abandon its nearly completed factory and shift to
the western state of Gujarat, meaning production of the first 100,000
cars was badly delayed.
Recently, the car’s image has been hurt by a series of fires one of
which was replayed frequently on Indian television, showing a Nano
engulfed in flames. “Quality perception over safety of the car could be
a concern,” Mumbai’s Fortune Equity Brokers analyst Mahantesh Sabarad,
said.
There were no injuries as a result of the fires and a company
spokesman insisted that the Tata Nano is a “safe car with a robust
design.”
Tata Motors has announced a free safety upgrade involving new
features being added to the exhaust and electrical system.
“The car needs a lot of image engineering,” said Automobile
Commentator Murad Ali Baig. Another problem is that the Nano’s price has
gone up from the nice round launch figure of 100,000 Rupees as a result
of a rise in input costs, to 137,000 Rupees for the basic model without
airconditioning.
The cheapest Nano with an airconditioner is 160,000 Rupees.
“For the price of Nano, there are good second-hand cars on the market
with air conditioning,” Baig said.
Analysts say that Tata Motors, with its deep pockets, still has the
capacity to turn around the fortunes of the Nano, which is just 3.1
metres long but has won rave reviews for its spacious interior.
“The really good thing for Tata is that those people who have the car
are happy with it.
“Word of mouth is a slow process but I still think the car has
potential,” said, India’s leading automobile magazine Autocar Editor
Hormuz Sorabjee.
AFP |