Is the Tata Nano in the last leg of its journey?

Tata Nano car

Tata Nano. Consumer interest in the car dwindled following a few stray incidents of fire which created the perception that being an affordable car, it wasn't safe


  The most famous car from the Tata Motors stable, the mini car Nano, is perhaps in the last lap of its journey. The highest monthly sales it clocked in the last fiscal was 1,100 units in April last year.

The sales fell to an all-time low since its launch in March 2009 to just 174 units in March 2017. Cumulatively, between April 2016 to March 2017 the company sold only 7,591 Nanos, down 63 per cent.

Compare this with the beginning of the car that was touted as the 'One lakh car' and was launched amid much fanfare in March 2009 through a lottery system. The initial euphoria around the car got it over 200,000 bookings by May 2009, a landmark of sorts in Indian automotive history. The car managed to gain considerable attention of the international press, and had gained a cult status in the global automobile industry for frugal engineering.

In fact, the car was put on display at the prestigious Smithsonian’s Cooper-Hewitt, National Design Museum in New York in 2010.

Consumer interest in the car, however, soon dwindled following a few stray incidents of fire which created a popular perception that being an affordable car, it was not safe. By October 2009, Tata Motors had already ordered pre-emptive checks on the car and retrofitments keeping in mind the incidents of fire.

The damage, however, was done. By the time, the Sanand factory started running in June 2010, the Nano had already missed the bus. The initial idea was to build an affordable car that would convert the two-wheeler buyer to own a mini car for his family. Initial projections had shown that such a car could have the potential to sell around 20,000 units per month (a number close to  that of the country's highest selling small car Maruti Suzuki Alto would clock).

How the volumes fell Month 2016-17 2015-16 April 1,100 1,486 May 856 1,365 June 481 1,700 July 701 2,120 August 711 2,235 September 610 2,415 October 726 2,300 November 525 2,263 December 1,004 1,374 January 391 1,608 February 312 1,414 March 174 732 Total 7,591 21,012 Source: SIAM

  Tata Motors took the bold decision to build a dedicated plant for the Nano instead of making it one of its already existing plants like Pune or Pantnagar anticipating huge demand for its affordable vehicle.

The decision, however, backfired. First, the farmers'agitation is Singur (in West Bengal) forced the company to relocate the plant Gujarat's Sanand. The loss is estimated to be around a few thousand crore. Tata Sons former chairman Cyrus Mistry had pegged the cumulative losses arising from the Nano project at Rs 6,400 crore.

While the Nano had always struggled to pick up momentum, with the launch of automatic manual transmission (AMT) and other peppy city variants, sales had seen some signs of revival in 2015. The GenX Nano that sports a power steering, stylish interiors and comes with an AMT variant, was launched in May 2015. Tata Motors ended FY16 selling 21,012 Nanos, up from 16,901 in FY15.

Sales, however, started falling after that and so far has not shown any signs of revival.

The buzz around killing the Nano is indeed getting louder. The company,however, remains non-committal.

A company spokesperson had told Business Standard earlier on the issue of Nano discontinuation, "The hatchback segment is very important for us and the regulations and customer preferences are going to play a major role in defining various sub-segments within this segment. We already have a well-defined approved PV strategy in place that will look at not only the best way of addressing the segments’ requirements but an overall perspective of the portfolio and you will see the action happening from our side.”

The irony is the Sanand plant, initially dedicated to making the Nano, is now busy making the Tiago hatchback and the Tigor sedan. Banking on these two well received products, the plant now aims to touch full production capacity within this fiscal.

A couple of years back, capacity utilisation of Sanand had dropped to 20 per cent or so.

The Nano timeline January 2008: Ratan Tata unveils the Nano October 2008: Nano plant pulled out of Singur following violence from locals October 2008: Project relocated to Sanand, Gujarat November 2008: Tata Motors starts working on rolling out Nano from Pantnagar plant March 2009: Nano launched from Pantnagar May 2009: Nano receives 203,000 bookings through lottery system July 2009: First Tata Nano delivered October 2009: Tata Motors orders pre-emptive checks & retrofitment after fire incidents June 2010: Sanand plant rolls out first Nano November 2010: Two-wheeler exchange scheme launched for Tata Nano December 2010: Sales continue to fall, hit a new low of 554 units March 2011: Tata Motors starts exporting Nano to Sri Lanka, Nepal October 2013: CNG Nano launched January 2014: Nano Twist launched May 2015: GenX Nano launched March 2017: Sales hit an all time low of 174 units