Tata Motors' Sanand plant stays idle as Nano sales drop

With Tata Motors' plant at Sanand in Gujarat lying idle along with impatient vendors has pushed the company into a corner. CNBC-TV18 now learns Tata Motors is working on a plan to utilise idle capacity at Sanand and could shift production of its high-volume products like the ACE to Sanand.

CNBC-TV18's Ronojoy Banerjee reports that this move has been necessitated by drastic production cuts of the Nano due to very poor sales.

Also read: Tata Motors shares jump after Q4 earnings surprise

Tata Motors has utilised just a fraction of the Rs 2000 crore facility at Narendra Modi's Gujarat; home to the world's most affordable car -- Nano. Data reveals that in the last one year, there have been only two months when Tata Motors utilised more than 25 percent of its installed capacity at Sanand.

For April the company's total production of the Nano for the first time  fell below 1,000 units utilising just 4.5 percent of the installed capacity of 2.5 lakh units per annum or roughly 20,000 units per month; this, despite months of advertising, heavy discounting and offering a first of its kind credit card facility on the Nano.

A clutch of vendors who supply critical parts for the ultra small car are getting impatient.

In a detailed statement issued to CNBC-TV18, Tata Motors said, "On our production capacity plans, we are considering various options for optimally utilizing our manufacturing capacities for our PV and CV brands.

Tata Motors further said that despite the lull in the market, it was confident of sales picking up in FY14 which would help its suppliers too.

"As our production goes up, so will that of our vendors. We have stood by our vendors in an exemplary manner, as was seen during the transition from Singur to Sanand. So, will it be in the future too."

Its small car continues to be big trouble for Tata Motors. Sources say, the company is hoping to give the Nano a boost with a bigger 800 cc and 1 litre engine.

But for now Karl Slym's ambition of clawing back to the number 2 spot in the car market seems like a distant dream with Tata Motors slumping to number 5 in the pecking order in May.