Tata is doing everything possible to revive the shriveled sales of the Nano. Sales of the ultra-lowpriced Nano recently crashed to ultralow levels: In November, only 509 units changed hands, reluctantly. The success of the much hyped diminutive conveyance more and more looks like a flash in the pan, literally. The Nano became infamous for going up on flames. Then, Tata had to raise the ultralow price a few times. On top of that, Nano buyers were seen as bad credit risks by Indian banks and were hit with ultrahigh interest rates. Stir, simmer, and you have a recipe for disaster. Now, Tata has decided to fight back. However, the counter-offensive appears less inspired compared to the enthusiasm when the car was launched.
Tata now gives a four-year, 60,000km warranty on the Nano, up from 18 months or 24,000km, The Nikkei [sub] reports. Nothing earthshaking. Suzuki offers a three-year warranty on its Alto, Hyundai does the same for the Santro.
What else can Tata do? Financing. Forget about zero percent financing. Says the Nikkei: “Loans from State Bank of India, the nation’s largest commercial bank, run for seven years at annual interest of 8-11.5 percent. Most other banks offer 8-18 percent.” Before, Nano purchasers had to pay 15-19 percent, against about 11 percent for standard car loans. Has all the signs of too little, too late.
After long trials and tribulations, Tata openend a factory in Sanand that can produce 250,000 cars annually. According to The Nikkei, “accumulated shipments to November stand at only 71,326 cars.”
Ultra-lowcost cars are seen as a transitional phenomenon as a country moves towards mass motorization. Eventually, people want a real car with room for the family. Not too expensive. But also not too small. China had skipped the microcar stage completely, mass motorization was started with roomier 3-box cars such as the Santana or the Jetta, later joined by beefier Buicks. Small cars such as the Chery QQ are a recent phenomenon and all told do not command a dominating market share.