With the launch of the Tata Nano in March 2009, it was clear that the Nano will be the future of small cars in India. At a price of INR 1, 00,000 Tata presented “People’s Car” with features like good fuel efficiency, rear-facing engine, eco-friendly and stylish appearance, etc. The car received quick recognition from Indian families who previously could not afford a four-wheeler. As of May 2009, approximately 203,000 people had ordered a Nano. But in 2010, the sale of the car has seen a sequential drop. In July 2010, Tata Motors sold 9,000 Nano units, which fell to 8,103 units in August, 5,520 units in September, and just 3,065 units in October. In November, which is a month of festivals and when it is considered auspicious to buy new and expensive items, the sale of Nano fell to only 509 units, even as the overall sales of the Indian automotive sector increased 45% in October 2010. This resulted in overall domestic sales of the Tata engine in the passenger vehicle segment falling 25% to 15,340 units from 20,706 units a year earlier. Even high-end cars like Mercedes sold more than 500 units in the holiday month.
The main reasons attributed to the steady drop in Nano Cars sales are multiple fire incidents in India, rising car prices, and difficulty in obtaining the loan from banks. Since the launch of the Nano, there have been several cases of Nano on fire. The number of such incidents rose to six in August 2010. Experts attribute it to a faulty wiring system causing a short circuit and smoke. In addition to the fire incidents, the lack of financing options available to Nano customers is also causing a drop in sales. Banks are unwilling to make loans to low-income clients with concerns that they may default. According to statistics, nine out of ten Nano buyers apply for a loan. Also, the interest rate banks charge for Nano is around 20-22% compared to 13-14% for other cars. Tata has also increased the price of Nano, after which it is no longer a 1 Lakh Rupee car. Earlier this year, the company increased the price by Rs. 5,000 due to BS IV emission standards and by Rs. 30,000 after a few months due to increased cost of inputs.
Having learned of the problems that led to the drop in sales, TATA has taken several steps to rectify the situation. Taking into account fire incidents, the company will provide free security updates. It is proposed to add additional safety features in the exhaust and electrical system of the car. The company has launched an exchange scheme under which customers can exchange their two-wheeler for a Nano, paying the differential amount. The company is also taking the initiative to provide financing for Nano with the help of its financial arm Tata Motors Finance Ltd, by linking up with nationalized banks and cooperatives etc. The company has improved interaction with customers and distributors to receive their feedback in order to improve the product. There are several kiosks set up across the country to target the rural market, where people have not driven a car or visited a showroom. Steps have also been taken to reduce vehicle waiting time and change the perception that there are still long reservation queues for Nano.
Read more ….. Click on the link below
