Nano hits a new low in March, is it nearing its end?

Sumant Banerji   New Delhi     Last Updated: April 11, 2018  | 18:33 IST
Nano hits a new low in March, is it nearing its end?

Last month, India's wonder car Tata Nano that had once captured the imagination of the global automotive industry, hit a new low. With sales of just 29 units during the month, March was the nadir for the world's cheapest car. In fact in five of the last six months, Nano's monthly tally could not even hit triple digits. As a result, it now finds itself in the bottom ten list of worst selling cars in the country.

Nano's descent into ignominy has been well documented but it still makes for an engaging read. At its peak in 2011-12, its sales touched 74,527 units. It has been a downward slide ever since despite repeated attempts at propping it up including giving it a full facelift with the GenX Nano replete with an automatic transmission in 2015. Nothing has worked.

The stigma of being a cheap car and questions over its quality and durability that first surfaced after a dozen cars caught fire in its initial days, have stuck. Last fiscal, only 1852 units were sold. That is way less than what Maruti 800 and Hyundai Santro sold in its final years before they were discontinued in the market.

Rumours of the end of the road of the Nano have circulated for quite some time and even the die-hard optimist will struggle to make a case for the Nano now. Yet, given that it was a dream project of Tata Group Chairman Emeritus Ratan Tata, it is a sensitive topic in the boardrooms of Tata Motors. Most senior executives refuse to speak on the future of the car and those who do are mostly defensive about it.

Nano sales since launch in July '09

"People are targetting Nano for no reasons. The only model (in passenger vehicles) that makes money is Indica, every other model makes losses," Tata Group chairman N Chandrasekaran had told a TV channel last year. "Nano's loss on yearly basis is only about 4 per cent of the losses that our passenger cars make, so whether you shut down Nano whether you give it a life, the number is not going to change and this is not a billion-dollar question in front of Tata Motors."

The questions on its survival have persisted amidst rumours from time to time that the company is considering shutting down its production at the Sanand factory. Last fiscal, a little over 1700 units of the car were produced.

"We can't just switch off one product and switch on another," Chandrasekaran, had said in response to shareholders' questions on Tata Nano's future at Tata Motors' 72nd annual general meeting in August last year. "We need to take a holistic view."

Nano also found itself at the centre of the controversy between Tata and former chairman of the group Cyrus Mistry in the fag end of 2016 when the latter alleged that the car had reached a peak loss of Rs 1,000 crore. Mistry would go on to say that Tata Motors was unable to close down the project due to emotional reasons.

Nsno sales since launch in July '09 (fiscal-wise)

The failure of the car has as much to do with the tag of a cheap car as the fact that Indian consumers are more aspirational today and prefer a bigger more powerful and feature-rich product, It is something that has deflated the entire entry-level car market for the last few years. While the Alto continues to be a bestseller, its sales are way off its peak of 2010-11. Others like the Hyundai Eon and Renault Kwid have also found growth elusive.

Guenther Butschek, the chief executive at Tata Motors reiterates no decision has been taken on the vehicle's fate. He is still keen to have a vehicle less than 12 feet long, which is favoured by some drivers for its practicality in India's congested cities.

"That's a good piece of the market, and this is where we play the game today with the Nano," Butschek said at the Geneva Motor Show earlier this year. "The question is how are we going to play this segment in the future... we have intensive discussions and no decision has been made."

The theory that two-wheeler consumers would eventually graduate to a budget car holds true on paper but seems much more difficult to replicate in reality. Nano is a prime example of that.

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