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Old 2nd November 2010, 18:33   #1
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Default 2 wheels for 4 scheme yet to spur Nano sales

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A scheme launched three weeks ago by Tata Motors Ltd to encourage scooter and motorcycle owners to upgrade to the company’s inexpensive small car Nano has met with limited success, according to dealers, because of the lack of financing options.

Meanwhile, sales of the Nano continue to decline, and according to the Tata Motors website, they have fallen from 9,000 units in July to 8,103 in August and 5,520 in September.

In early October, Tata Motors started selling its small car, the entry-level variant of which costs Rs. 1 lakh as it leaves the factory (several taxes are added on at the dealer level), in Maharashtra, Karnataka, West Bengal and Uttar Pradesh.

It simultaneously launched a promotional scheme allowing owners of scooters and motorcycles to turn in their vehicles as part payment for the Nano.

“We sold only four cars through the scheme,” said a Mumbai-based dealer for the company, who did not want to be identified.

R. Ramakrishnan, vice-president (commercial), passenger car business at Tata Motors, said the scheme was a response to the large number of queries received by the company from scooter and motorcycle owners keen on an exchange.

“It’s too early to count the numbers,” he said, and added that given the huge number of scooters and motorcycles in India (around 1.2 million), the scheme should succeed in coming months.

When it was launched, analysts and Tata Motors executives said the Nano—engineered for a family of four on a bike—would eat into scooter and motorcycle sales. That hasn’t happened.
According to industry lobby group Society of Indian Automobile Manufacturers, in the six months to September, Indians bought 5.6 million motorcycles and scooters, 26% more than in the same period last year.

No one, however, is attributing the Nano’s sluggish sales to problems with the car itself.

Most dealers claim it is because potential buyers aren’t getting loans for the car. One dealer, who did not want to be identified, said almost nine out of every 10 people looking to buy a Nano are also shopping for a loan.

But banks are rejecting many applications because many buyers do not have all the documents needed to apply for a loan, he added. When financed, a Nano is an attractive and affordable buy.

According to an ad that appeared in Mint’s associate publication the Hindustan Times on 20 October, a customer can drive home a Nano with a down payment of Rs. 23,515 and monthly payments of Rs. 2,077 for seven years. Separately, the company declared on Friday an average price hike of Rs. 9,000 effective 1 November.

Tata Motors’ Ramakrishnan concedes financing has indeed been a challenge. A Nano costs around twice the price of a motorcycle and most buyers need a loan, yet, their risk-profile remains similar to that of a typical motorcycle buyer’s.

The rate of interest on two-wheeler loans is 20-22%, almost double the rate on cars and commercial vehicles, according to Ramakrishnan. “We are in dialogue with several financiers and are requesting them not to treat finance for Nano on par with that for two-wheelers,” he added.

The company is also trying to fund Nanos through its motor finance arm Tata Motors Finance Ltd. Unlike other finance firms, however, this offers loans for only a four-year tenure, which doesn’t suit most buyers.

Mohit Arora, executive director at JD Power Asia Pacific, a consulting firm, said that while it may be too early to conclude that the Nano hasn’t attracted motorcycle and scooter owners, Tata Motors “will need to make bigger efforts to attract two-wheeler buyers”.

Mahantesh Sabarad, senior vice-president (equity) at domestic brokerage Fortune Equity Brokers (India) Ltd, would also like to see the company look beyond the banks—at non-banking financial companies that have a “higher risk appetite”. He added that Tata Motors could also increase sales of the Nano by offering dealers “better margins” to hard-sell the car.
Is the Niggle/Fire reported problems are ruin the Nano Sales?! whats your thought?
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Old 2nd November 2010, 19:05   #2
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“We sold only four cars through the scheme,” said a Mumbai-based dealer for the company, who did not want to be identified.
I don't think they will get such response in Metros. This scheme would be more popular in small town India where Nano is not available off-the-shelf yet.

EDIT : Customer response like this :

http://www.team-bhp.com/forum/2126764-post63.html

This is definitely not going to help Nano.

Last edited by NetfreakBombay : 2nd November 2010 at 19:07.
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Old 2nd November 2010, 20:26   #3
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When it was launched, analysts and Tata Motors executives said the Nano—engineered for a family of four on a bike—would eat into scooter and motorcycle sales. That hasn’t happened.
That is because it was on par [ok, atleast twice and not 5 to 6 times as it is now] with the 2 wheeler price. So, how can they expect that to happen NOW :(
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Old 3rd November 2010, 11:35   #4
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I strongly feel there is an Anti Nano lobby working across the nation, mooted by competitors.

Hope this Indian dream should not end up as nightmare...
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Old 3rd November 2010, 12:12   #5
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These decisions (whether to buy a car or not) are taken by individual buyers. How can a loby influence that? Nano would be available off the shelf across nation in few months, and it would be word of mouth that would drive it to gloom or glory.
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Old 3rd November 2010, 14:35   #6
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sales of the Nano continue to decline, and according to the Tata Motors website, they have fallen from 9,000 units in July to 8,103 in August and 5,520 in September
And in Oct it is down to 3K-odd units, IIRC from the Oct-sales thread. The Alto, in contrast, has zoomed to 32k units, post the K10 introduction.

Quote:
Originally Posted by wildon
Is the Niggle/Fire reported problems are ruin the Nano Sales?! whats your thought?
While fires are a concern, I dont think they are the reason behind the low sales. Because the fire-thing does not seem to be known to most people. A new Nano was in our neighborhood and everyone was admiring it, the space, low cost etc. None of them seemed to have even heard of any Nano catching fire.

I can think of atleast 3 reasons why the Nano is not selling :

1) The original plank on which the idea was built was wrong. To assume that given a car for 1lakh, a big majority (if not all) of Indian bikers will either sell their bikes to get the car or get a car in addition to the bike was wrong.

With car ownership, it is not just the initial price. Running costs are much higher than a bike - taxes, insurance, mileage, cost of spares/tyres/battery, etc etc. So, a simple swap from bike to car is not practical. Unless you can really afford a car. In which case, why look at the Nano alone when there are so many other options.

Also, the typical Indian situation is such that, even if you have a car, it is mostly tough to live without a bike - for those short/quick runs to the nearby market, where no parking for car available etc. I have a car, but can't do with just it - need a bike also.

2) Expectation created vs Actual scenario : The whole hype about the Nano was due to a single thing - price of 1lakh (2500USD). But when the car became a reality, the price was higher by 50% - 125% of what was touted. Naturally a big dampener. Ofcourse you could argue that input costs went up in the meantime. But that would have been expected when the car was announced - so using that as an excuse does not work.

3) This one I am not so sure. Could people be shying away from this car due to the cheap image - as in cheapest car in the world ? yeah some big shots have this car, but then they dont need to prove to anyone that they cant afford anything more than the Nano. Would not be the case with the normal janta.

Quote:
Originally Posted by NetfreakBombay
Nano would be available off the shelf across nation in few months,
It already is available off the shelf - someone I know bought one 2 weeks ago.

Quote:
Originally Posted by rangarx
I strongly feel there is an Anti Nano lobby working across the nation, mooted by competitors.
LOL. Imagination working overtime.
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Old 3rd November 2010, 14:53   #7
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Originally Posted by supremeBaleno View Post
It already is available off the shelf - someone I know bought one 2 weeks ago.
I think that is limited to few states. It will take some time for supplies to be ramped up to that level.
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Old 3rd November 2010, 15:50   #8
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Tata Motors DONT give sales numbers, they give numbers of deliveries made in a particular month. In last two months sales have dipped because :-

source: The Hindu Business Line : Nano production to be ramped up soon


Quote:
Nano production to be ramped up soon. Entire production to be shifted to Sanand.
Production of Nano cars will return to the levels of 8,000-9,000 in two-three months as Tata Motors is ramping up production at the dedicated manufacturing plant in Sanand, Gujarat.

Mr R. Ramakrishnan, Vice-President, Passenger Car Business Unit, Tata Motors, said that Nano production went down in September because the company had stopped making the car at the interim facility a the Pantnagar plant and shifted production entirely to Sanand.

The Sanand plant has the capacity to roll out 20,000 units a month. However, the current monthly production hovers around 5,000 units.

The despatch of Nanos increased progressively from 3,525 in May to 7,704 in June and to 9,000 in July and 8,103 units in August. This is mainly because the company started making Nanos at Sanand in June, besides continuing production at Pantngar. The company was making around 3,500 units in Pantnagar and the rest from Sanand plant.

Mr Ramakrishnan said that the whole supply chain is to be fully in place before ramping up production. Some of the component suppliers at the vendor park attached to the Sanand plant are yet to be fully operational. There are 41 component makers at the vendor park.

About the incidents of Nano catching fire, he said that the incidents were not due to design flaws. He said the company is working on diesel, electric and CNG versions.

More Ace capacity

Having stopped making Nano at its light commercial vehicle plant in Pantnagar, Tata Motors has freed up capacity to make many more units of sub-one tonne light truck Ace. The company had earlier planned to increase the production of Ace at Pantnagar to 2.75 lakh units a year from 2.25 lakh.
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Old 3rd November 2010, 16:04   #9
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^^^ OK that seems to explain the dip in Oct2010 numbers.
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