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Nano sales up to 5K units in December - Mr.Bhat - 12-31-2010

Nano, the world’s cheapest car produced by Tata Motors, is all set to recover from its successive decline in growth for five months and post robust sales in December, buoyed by new finance schemes and other incentives.

Sales of the Nano may touch around 5,000 units in December after it sputtered to 509 units in November, triggered by a couple of spontaneous fires and lack of easy finance, according to top five dealers. The small car posted its record sales of 9,000 units in July before languishing to the current level.

Most dealers have cleared their huge backlogs, helping enhance production which came to a near standstill at the Nano plant at Sanand in Gujarat. “Sales of the Nano have picked up in the past 10 days. For the momentum to continue, the various schemes launched by the company will have to continue beyond December 31,” said a Mumbai-based dealer. Tata Motors spokesperson declined to comment.

The company launched a zero percent finance scheme, 4-year extended warranty and Rs 99 maintenance contract to boost Nano sales in the first week of December. “Effective communication has helped the company post better wholesale and retail sales this month. We will see the sales numbers rising in the next few months,” said Abdul Majeed, auto practice leader, PwC.

The top management of Tata Motors has been visiting dealers to boost their confidence and advocate changes such as staff training to boost sales. Dealers will set up dedicated teams for the small car. “We have been asked to educate customers about changes in the product and new safety standards,” said a dealer in New Delhi.

Some dealers are still grappling with high inventories, putting them at a disadvantage to pick fresh stocks this month. Industry estimates of Nano inventories across India stand at 10,000 units. The company will have to grapple with the challenge of clearing inventories in the next year, according to industry executives.

Tata Motors is introducing an upgraded version of the Nano, with more features such as power steering, five speed gear box, in the first quarter of 2011. This will be priced 5-10% more than the current model, according to the executives. “The company needs to be cautious on the pricing front as any increase in the price will reduce the gap between the nearest competitor, forcing the customer to make a switch,” said Majeed.