Tatas offer to fit safety add-ons for Nano

NOT A RECALL BUT QUALITY FIRST

THE maker of the world's cheapest car announced a number of steps to enhance its safety after a series of fire incidents while insisting that the move did not amount to a recall. Tata Motors, India's largest automobile company, said it would upgrade the exhaust and electrical systems for all the 70,000 Nanos, currently on road. The initiative comes after a sharp fall in Nano sales from 9,000 in July to 3,065 in October, a period which saw the domestic market clocking 30% growth.
    "It's the adverse impression created from those fire incidents that has shaken the confidence of potential customers in the car. The few incidents have labelled the car unsafe, which is reflected in the declining sales," said a Delhi-based Tata Motors dealer, who spoke on condition of anonymity.
    Safety concerns around the much-hyped car — the cheapest version of which costs 1 lakh — rose after seven cases of fire were reported from different parts of the country, the latest being on September 27 in Ahmedabad in Gujarat. Asserting that these checks do not constitute a 'recall', Tata Motors on Wednesday insisted that the modifications were intended to make the small car more robust. The statement from Tata Motors, while insisting that the car was safe, said Nano owners could get them upgraded, if they so desired. Nano fires 'stray cases', says
Tata Motors
RECALLS of locally-manufactured vehicles are almost unheard of in India. Unlike the developed markets of Europe and the US where engineering defects often lead to mass recalls, no legal protection is provided for Indian customers in the Central Motor Vehicle Rules.
    Tata Motors spokesman Debasis Ray asserted that there were no generic defects in the Nano and that the company would inform its owners about these safety measures beginning the third week of November.
    "We would like to state that Nano is a safe car with a robust design. This has been re-established through a second analysis, conducted during the months of September and October 2010 by the company," he said on Wednesday.
    The company spokesman said as a pre-emptive measure, Nano dealers approached customers in May 2010 for an inspection. "However, after the second round of investigation, we thought, we should go back to all our customers and make the car more robust. These are additional safety measures," he added.
    Tata Motors has maintained that all the different fire incidents were 'stray cases'. The statement issued on Wednesday said that a 20-member internal team and an independent forensic expert had undertaken a comprehensive investigation related to the cause of the fires.
STOCK AT RECORD HIGH
The Tata Motors scrip has not been affected in the least by Nano's troubles. On Wednesday, the stock zoomed 6.3% to a record high of 1,350 in a weak Mumbai market, as investors cheered the company's soaring quarterly profits. The stock has been boosted by a sharp turnaround at its UK unit, Jaguar-Land Rover and rising domestic sales. Citigroup, Bank of America Merrill-Lynch and Citigroup have raised their price targets.
    The announcement on the enhanced safety measures came after market hours.
    Despite the sterling performance of its other businesses, adverse perceptions about the car's safety has hit the company's production plans. According to a number of officials at vendors supplying components for the Nano, Tata Motors had planned to raise production to over 500 cars per day from the second-half of the current fiscal. But lack of demand and high inventories at dealerships restricted the production to a mere 100 cars per day.
    An official at a Delhi-based component supplier to Nano told ET that the car had not lived up to expectations. "The car is facing challenges in the market and has not lived up to our expectation. After the hype, people were not so impressed with the build quality and performance. Our supply orders are also on the decline, as the company (Tata Motors) is coping up with growing inventories that has altered its production plans."