Ratan Tata says Nano wasted early opportunity
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The Nano is not a flop, its creator Ratan Tata said on Thursday, but he acknowledged that his Tata Motors failed to capitalise on the early excitement surrounding the launch of the world's cheapest car.
In a wide-ranging briefing with journalists, Tata, who will retire in December as head of the Tata Group, India's biggest business house, revealed certain shortcomings in the way the car was sold.
Four years ago Tata Motors unveiled the Nano in what was seen at the time to be a crowning achievement for the silver-haired Tata, but sales have trailed far behind early expectations following a series of setbacks.
"We never really got our act together when the 100,000 were depleted," he said, referring to the first batch of Nanos sold through a lottery system when initial demand exceeded supply.
"I don't think we were adequately ready with an advertising campaign, a dealer network," he said during a two-hour breakfast meeting with journalists on the first day of the Delhi Auto Expo - the same event where a euphoric Tata and his Nano stole the show four years ago.
A rising price - the entry level Nano now costs 140,000 rupees (US$2,657), above the 100,000 rupees initially envisioned - as well as production delays, quality concerns following two voluntary recalls, and a stigma over the car's 'cheap' image have all dented demand.
Sales have been a fraction of the 25,000 a month the company once expected, falling to a low of just 509 units in November 2010. In December, the company sold 7,466 units, a rise of 29 per cent from the same month the previous year.
"We've never pushed it as a poor man's car. We pushed it as an affordable all-weather family car. Period," said Tata, 74, who over two decades has built the Tata Group into an $83 billion conglomerate that generates two-thirds of its revenue outside of India.
While the Nano has failed to live up to expectations, Tata Motors' $2.3 billion purchase of luxury car-marker Jaguar Land Rover in 2008 has exceeded them. CLSA recently upgraded Tata Motors to outperform on the outlook for the two British brands.
"In sum, I don't consider it to be a flop. I consider that we have wasted an early opportunity," said Tata.
Tata is launching a Nano that runs on compressed natural gas at the car show, a company official said, but is at least a year away from launching a diesel version, which many critics say is key to success for the Nano in a country where petrol costs 56 percent more than subsidised diesel.
"I believe that we will see a resurrection of this product as we move forward," Tata said.
Tata said the company still wants to develop a low-cost car for the European and U.S. markets, but such a car will need to be upgraded to meet safety and emissions standards and include the sorts of extras that western consumers demand.
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