The future of Tata Nano, the world’s cheapest car, remains uncertain even as Tata Motors prepares to welcome the next generation of advanced products that look to rejuvenate market perceptions about the brand.
Shareholders speaking at the 72nd Annual General Meeting demanded to know the future of Nano, which has become a beleaguered product for Tata Motors despite years of efforts to generate consumer excitement.
“We have issues we need to sort out. We will take a call which car needs to be stopped," Tata Motors Chairman Natarajan Chandrasekaran told shareholders gathered at the iconic Birla Matoshri auditorium in Mumbai.
The Nano was developed by Tata Motors to address the needs of middle-class families who do not have the budget to buy a standard Rs 3.5 lakh car. The vehicle, a dream of former Chairman Ratan Tata, has consistently failed to attract buyers.
The last financial year was the worst for the mini car as it sold just 7,591 units, less than the monthly volume clocked by Tiago and Tigor, the two new launches by Tata Motors which make up 50 percent of its sales.
In June, Nano sales hit a lifetime low of 167 units. The car continues to be made at the Sanand plant in Gujarat. Chandrasekaran, however, remained non-committal over the future of the mini car.
“It’s not about switching one car on and one car off. Overall, we have a very low base in the passenger car segment. As I said upfront on a Rs 2,80,000 crore revenue on a consolidated basis the passenger car business is about Rs 9,000 crore. We are talking of 3 percent," added Chandrasekaran.
“In order to scale this up we need volumes on different platforms and our cost structure in the passenger car business is very high irrespective of the platform. Our material costs are very high. So the management is working across the board to improve the entire cost structure across platforms. If we take decisions on one platform or another all the time it is going to be very difficult. We need decisions across platforms," added Chandrasekaran.
“The key thing to see here is that if you are only 3 percent of the overall company and overall market share is also low, even if we take the largest player in this segment we are about one-tenth to that player. So we have a long way to go in this segment” added Chandrasekaran.
Though commercially launched in 2009, the Nano will complete ten years next year since its first unveiling in 2008 at the Delhi Auto Expo. The car became instantly popular for its eye-catching price tag of Rs 1 lakh — designed to lure the middle-class buyer.
However, subsequent iterations that included subtle styling changes, creation of a boot, addition of an automatic transmission, power steering, addition of a CNG-fueled engine and repositioning of the brand led to more than doubling of its cost price.
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