With Nano production registering a new low last month, officials of Tata Motors, India’s largest vehicle maker, will meet component suppliers of the small car tomorrow to brief them of the demand situation and give them new supply projections for the coming months.
Dispatches of the Nano to the company’s dealers fell to 509 units in November from 3,065 units in October. Production of the small car, however, has since been increased back to the October levels to around 175 units per day presently, said sources.
Although a direct sales counter has been opened in 12 states now (as opposed to the lottery booking system earlier), retail offtake of the car has so far been below expectations.
Tata Motors has projected sales of 20,000-25,000 units of the Nano every month by March 2011. Due to the lower production levels at Sanand, Gujarat (production center), there is a huge inventory of parts lying with the vendors. Vendors say they were given much higher projections that would sustain production at 9,000-10,000 units per month levels.
However, owing to sluggish demand, thanks to the recent fire incidents with the car, sales dropped 85 per cent in November compared to a year before. Tata Motors, however, maintain that retail demand (consumer purchases from the dealer) for the Nano has been increasing every month, although it has refused to provide absolute numbers.
“We have spoken to the company and they have assured that production will pick up and that they expect a higher demand in the coming months. The matter will be discussed in the upcoming meet,” said a leading vendor on grounds of anonymity. He said that sourcing has not slowed down due to production glitches, but primarily due to sluggish demand.
Tata Motors already has an inventory of close to 6,500 cars at Sanand, and has been going slow on production last month, when the average production was around 50 units per day. According to industry sources, average production in December is likely to increase to 150 per day.
A Tata Motors spokesperson stated, “While we cannot disclose day-to-day production targets at the Sanand plant, we assure you that the plant is producing according to a plan. Now being the year-end, we want to keep as little inventory at dealerships as is possible. The company dialogue with its vendors on a periodic basis, which are internal to the company and its vendors, is nothing extraordinary.”
Tata Motors is believed to have issues with its dealer network, too, with not many dealers keen on picking up the Nano, mainly due to issues related to margins on the car which are far below other Tata products.
Vendor sources indicated this is why Tata Motors is going in for phase-wise opening of Nano sales across the country despite having an inventory and a steady production option.
At the inauguration of the plant in Gujarat in June, Tata Motors had stated that plots had been allocated to 41 vendors at the vendor park. Several of them are getting ready and over the next two months will be shifting production to Sanand from their facilities elsewhere in the country.