To revive sagging consumer confidence in the world’s cheapest car Nano, Tata Motors, India’s biggest auto maker, is working with banks to provide attractive finance packages, while more than doubling the period of warranty on the car.
The company with annual sales of more than Rs 92,500 crore, today said its wholly-owned subsidiary, Tata Motors Finance, a non-banking finance company (NBFC), will provide 90 per cent loan on the ex-showroom value of the car at an interest rate lower than those charged on two-wheelers. It has also enhanced the warranty period to 48 months years (or 60,000 km) from 18 months (or 24,000 km). Besides the new deliveries, the extended warranty will cover existing owners, too.
It will also provide new buyers an option to avail a comprehensive maintenance contract at Rs 99 per month, which will help customers take care of running maintenance of the car. The company is in talks with a host of national and regional level banks, and is working with financial institutions at various branches in the remotest part of the states where it has opened sales counter of the Nano.
The car debuted in the market with an aim to provide a better alternative to a two-wheeler, but has been struggling to stay afloat of late amid muted retail demand and unwillingness of banks to provide finance for the car.
While loans from banks on the Nano range between 8-18 per cent for 4-7 years, NBFC and others charge interest of 11-20 per cent for an equal tenure. Most loans on two-wheelers are upwards of 10 per cent.
Tata Motors was forced to drop production of the Nano in November to just 509 units to clear the huge inventory it carries at most Tata Motors dealerships. The company has so far opened sales of the small car in 12 states and intends to cover the entire country before the end of the year.
While major lenders like State Bank of India and HDFC Bank are being approached to simplify the consumer profile of loan seekers (which were regarded as those fit for only two-wheelers), other institutions like co-operative banks and local banks are engaged.
The company has tied up with 26 financiers across NBFCs, public sector banks, co-operative banks and private financiers and more being worked upon, said a spokesperson.
Tata Motors Finance currently funds around 20 per cent of all Nanos on a minimum interest of 11 per cent on loans.
The company has also recruited salespersons to exclusively deal with Tata Nano customers, while special attention is being planned for remote areas.