Nano wasted early opportunity: Ratan Tata


After early hype, sales fell short of expectations; company to resurrect the small car.

The Nano is not a flop, its creator Ratan Tata said on Thursday. He, however, acknowledged Tata Motors failed to capitalise on the early excitement surrounding the launch of the world's cheapest car.

In a wide-ranging briefing with journalists, Tata, who will retire in December as head of the Tata Group, India's biggest business house, said the steel-to-software conglomerate had paid a price for not participating in corruption.

Four years ago, Tata Motors unveiled the Nano in what was seen at the time to be a crowning achievement for the silver-haired Tata, but sales have considerably trailed early expectations following a series of setbacks. "We never really got our act together when the 100,000 were depleted," he said, referring to the first batch of Nanos sold through a lottery system when initial demand exceeded supply.

"I don't think we were adequately ready with an advertising campaign, a dealer network," he said during a two-hour breakfast meeting with journalists on the first day of the India Auto Expo -- the same event where a euphoric Tata and his Nano stole the show four years ago.

The entry level Nano now costs Rs 140,000 ($2,657), above the Rs 100,000 initially envisioned. Production delays, quality concerns following two voluntary recalls, and a stigma over the car's "cheap" image have all dented demand.

"We've never pushed it as a poor man's car. We pushed it as an affordable all-weather family car. Period," said Tata, 74, who over two decades has built the Tata Group into an $83-billion conglomerate that generates two-thirds of its revenue outside India.

While the Nano has failed to live up to expectations, Tata Motors' $2.3-billion purchase of luxury car-marker Jaguar Land Rover in 2008 has exceeded them. CLSA recently upgraded Tata Motors to outperform on the outlook for the two British brands.

"In sum, I don't consider it to be a flop. I consider that we have wasted an early opportunity," said Tata.

Tata is launching a Nano that runs on compressed natural gas at the car show, a company official said, but is at least a year away from launching a diesel version. Many critics say this is key to success in a country where petrol costs 56 per cent more than subsidised diesel.

"I believe we will see a resurrection of this product as we move forward," Tata said.

He said the company still wanted to develop a low-cost car for the European and the US markets, but such a car will need to be upgraded to meet safety and emissions standards and include the sorts of extras that Western consumers demand.

The Tata Group is not family-owned and Ratan Tata is not on the Forbes list of billionaires. Tata Sons holds the bulk of shares in key companies, and philanthropic trusts endowed by the Tata family own 66 per cent of Tata Sons, and the group enjoys a reputation for integrity.

India has been racked for more than a year by a series of corruption scandals, including over the award of 2G telecoms licences. Tata was among the corporate titans summoned to answer questions before a parliamentary panel, although neither he nor his group has been accused of wrongdoing.

"I think the issues have shown that we were one of the victims of what took place and not the offenders," Tata said.

The Tata Group, he said, "will deal with corruption the same way as they have, that is by not participating, sometimes to a great cost to the corporation".

"The fact is one hopes for an India ... where no one is above the law, and there's no preferential permits or approvals or such that are available that all aren't considered on a similar basis," he said.

Fallout from a series of scandals has battered India's ruling Congress party, stalled decision-making on project approvals, and scared off investors.

Unlike most of India's big business houses,

"We've never been asked to give a bribe because most of the agencies know that would not be possible for us to do," Tata said.