NANO – NOT YET TIME TO SHUT DOWN

By Ruma Dubey

When the Nano was launched, it was the pride of India. The world media had never focused so much ever on India’s auto sector. The limelight was equally on Ratan Tata and he did keep his word. Nano was indeed the cheapest four wheeler in India but the class and status conscious India simply did not want to associated with a “poor man’s car. The very purpose for which the Nano was launched, to help the precariously perched families on two-wheelers to a small car, proved to be its undoing. To make matters worse, the fire mishaps with the earlier models also did not help.

Today, the Nano is no longer sold at Rs.1 lakh; an entry price for Nano, now renamed as GenX Nano is at Rs.1.99 lakh. It is targeted at the young and yuppie. Nano sales till end of December were at around 7200 units v/s almost 11,500 in FY16. And this fillip in the numbers was thanks to demonetization which seems to have come to the rescue of the Nano, In December’16, Tata Motors sold 1004 units, up from 525 units in November and 726 units in October. This was the highest month-on-month sales growth amongst all Tata Motors cars last month.

What does this mean? Cyrus Mistry has had scathing things to say about Nano in his first letter of rue. He had said, “the Nano product development concept called for car below Rs1 lakh but the costs were always above this. This product has consistently lost money, peaking at Rs1,000 crore and 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”.

But demonetization seems to have helped Nano. If the car has no appeal at all, why would people it even during the note ban period? In all aspects, there is no denying the fact that Nano lost out to Maruti’s Alto and later to Renault’s Kwid as both were simply of much better quality. People do not mind paying more if they are assured of a good quality and really, when it comes to servicing, there is no one to match Maruti.

It is not Nano alone, the entire clan of models from the stables of Tata Motors suffers from an image – people simply do not have the faith in their models. Indica does well today, mainly as a “travel company” car. It has to discontinue the Aria model after it did not do too well. It currently has two bets in the market – Hexa and it competes with Renault’s Duster, Nissan’s Terrano, Mahindra’s Scorpio, Hyundai’s Creta and Honda’s BRV. The other new car – Manza is the most expensive car ever from the stables of Tata Motors, priced at Rs.17.50 lakh, it competes with Mahindra’s XUV500.

What we learn is that the Hexa has met with very good customer response. There was good booking even before its launch and the vehicle has a waiting period of eight weeks.

Tata Motors is planning to launch Nano in the electric version, to compete with Mahindra’s e20 and another premium version of the Nano – Pelican is also on the anvil. The company is also talking with Ola, the cab aggregator.

Yes, Nano is making losses consistently and yes, it has an “emotional cord” not just with Ratan Tata but rest of India too. It is too early to give up on it; maybe the new versions could work. Shutting down the Nano, in many ways would mean showing the door to the dreamers.