Just 509 Nanos sold in breezy Nov

Incidents Of Fire, Lack Of Easy Finance Hit Numbers Even As Auto Sales Zoom In Festive Season

NANO, the world's cheapest car, is failing to find favour with Indian families who could not afford an automobile earlier.
    The low-cost, four-passenger car reported sales of just 509 units in November 2010, a dramatic decline from 9,000 units in July, even as automobile sales surged on easy finance and festival season. Mercedes, one of the costliest cars in the world, sells more than 500 units in India, touted as the world's fastest-growing automobile market.
    Despite the fall in Nano sales, Tata Motors' second-quarter profit rose more than 100-fold as a global economic recovery spurred demand for luxury sedans and sports utility vehicles. The company's stock price has appreciated 78% over the past six months.
    But the Nano will continue to remain a headache for Tata Motors. The company had targeted a production of 20,000 units a month by December 2010 at the time of its launch last year.
    But a series of reports on the car catching fire, starting from March this year, doused the initial enthusiasm of customers who had rushed to book the Nano when Tata Motors launched it with a target sale price of 1 lakh, less than half the cost of the cheapest car available in India.
    Ravindra Bhagat, an Ahmedabadbased businessman, was one such customer who bought a Nano last year. Bhagat's dream turned sour when the car caught fire within 20 days of its delivery. Freak fires, loan issues begin to hurt
"THOUGH I received complete compensation for the car, I lost faith in the product," says Bhagat.
    While the fire incidents took their toll, many other customers dumped the Nano due to lack of easy finance. Sales dipped after the initial euphoria because the car was not reaching the target audience, said people familiar with the company's management. Tata Motors says it is taking a series of measures to lure customers in rural areas and small towns to the Nano. It has opened sales offices in states such as Kerala, Karnataka, Maharashtra, UP, West Bengal, Chhattisgarh, Madhya Pradesh, Andhra, Bihar, Jharkhand and Gujarat since August this year to boost sales.
    The auto major is also setting up special access points, in addition to showrooms, where customers can come and experience the car. It has recruited about 1,200 people to engage with customers. "The profile of such customers who are desirous of the Tata Nano is that of a two-wheeler purchaser or those who do not own any personal mobility at all. Many of them do not know driving. We are addressing their questions through initiatives like test rides and extensive interactions," the company said in a statement. "Initially when we went through the booking route, we had no control on who was buying what, or who was getting the allotment because it was all random. After we started doing the deliveries, we found that a lot of people who purchased the vehicle are actually having a car already, some even had two cars," said an official close to Tata Motors.
    Two successive price hikes also contributed to the fall. "It is an emission regulation that we have to meet, which comes at an extra cost. There is a legislation-led cost rise too that has to be passed. So today a base version comes for around 1.36 lakh, inclusive of all taxes," the person said. Analysts feel sales will slip if the product is sold in the current form. "Unless Tata Motors makes some radical modifications, Nano sales will continue to languish," said Mahantesh Sabarad, analyst at Fortune Financials.