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Nano - Pantnagar plant not viable in longrun

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As commercial production at Tata Nano’s mother plant at nearby Sanand started earlier this week, vendors supplying components to the dual locations, here and to the other production unit at Pantnagar, Uttarakhand, feel continuing with a low-volume production line at the latter would not be viable in the long run.

 

A leading vendor, supplying at least six crucial components of the car, said on condition of anonymity, “Currently, we are supplying to feed a production of around 200 cars per day in Pantnagar and also to meet demand in Sanand. As of now, the car will continue to get produced at both the sites to ensure faster deliveries. But, continuing to feed a low volume assembly line at Pantnagar would become difficult in the long run, owing to logistical issues.”

Sanand is making 200-300 Nanos a day, likely to be scaled up to 1,000-1,200 cars a day by March next year. It has an installed capacity of 2,50,000 cars annually, to be expanded to 3,50,000 and eventually, depending on demand, to be scaled up to 5,00,000 cars annually (at 1,000-1,200 cars a day, the plant is likely to touch around 3,50,000 cars a year by March 2011, considering 295 working days in a year).

The company aims to complete deliveries by December of cars booked in the first lot, so that it could start fresh bookings. When asked if production at Pantnagar would continue after the first lot of bookings had been cleared, a Tata Motors spokesperson said, “A decision on that is pending.”

Tata Motors collected 2,06,703 orders for the eagerly awaited Nano during the initial sales period last March-April. From this, 1,00,000 customers were chosen by a lottery. Deliveries of the cars began in July last year. Around 35,000 cars have been delivered so far.

A Rajkot-based component supplier said, “For bigger vendors who have units in Pantnagar, continuing to feed the line there might still be viable. But, for smaller vendors supplying from existing locations, it will have an impact on our margins.”

A Kolkata-based dealer of Tata Nano, RD Motors, said: “We still get around five to 10 queries a day on the Tata Nano, people asking when fresh bookings start. The company plans to reduce the delivery time of the car and make it available off-the-shelf after the first 1,00,000 deliveries are made.” Ahmedabad-based Swati Auto Link confirmed this, but did not want to comment on when fresh bookings could start.

One possible reason why Tata Motors would like to hasten the process of making the car readily available is that other car makers are trying to replicate the Nano story, with low-cost, mass segment cars, according to industry watchers. Hyundai’s 800cc Rs 2-lakh car, likely to be launched in the second half of next year, will directly compete with the Nano. The Renault-Nissan Alliance and Bajaj Auto are teaming up for a $3,000-car (Rs 1.5 lakh), projected to hit showrooms in 2012.