Low-cost Nano a tough sell

THE WORLD’S cheapest four-seater car, the Tata Nano, has failed to find favour with middle-class Indians eager to buy their first affordable automobile following safety problems.

Sales declined by an alarming 85 per cent, to 509 Nanos, last month compared with November 2009 after at least six of them caught fire, the last one on the streets of New Delhi in August.

This was the fourth straight month of falling sales from the high of 9,000 cars in July.

Dramatic footage of the fires on TV news channels, beginning with the first one, in the western Indian city of Ahmedabad, has adversely impacted the sale of the two-cylinder, 600cc Nano, which is designed and built by Tata Motors, owner of the luxury Jaguar and Land Rover brands.

“Though I received total compensation for the [burnt] car I lost faith in the product,” said Ahmedabad-based businessman Ravindra Bhagat, one of Nano’s first customers after its commercial launch, 17 months ago.

Market analysts said another reason for poor sales was Tata’s offer of free retrofits to more than 71,300 Nano owners to safeguard their cars against fire.

And though Tata called it an “upgrade” and not a “recall”, it compromised its stand by installing additional safety features to the cars’ exhausts and electrical systems, further triggering uncertainty among potential customers.

“It’s a disappointment,” said Delhi businessman Noni Chawla, one of the first to acquire the car in the Indian capital. Once its novelty wore off, it was pedestrian, more like an air-conditioned scooter rickshaw than a car, he added.

At the time of its launch, in July last year, Tata had targeted production of 20,000 Nanos a month by now; the true number has fallen woefully short in one of the world’s fastest-growing car markets.

Overall domestic car sales in India rose by 34.2 per cent, to 102,503 automobiles, last month during the season of Diwali, or the Festival of Lights, associated with high-end purchases and gifts.

Market figures revealed that this was the sixth time that car sales had crossed 100,000 units in the 2010-1 financial year, stimulated by easy, low-interest loan schemes that were posing a problem for Nano.

Car financiers, for instance, categorise prospective Nano buyers on the basis of their financial profile as being eligible only for a loan for a two-wheeler but not a car.

Consequently, to try to salvage declining Nano sales, senior Tata executives had embarked on a nationwide campaign not only to promote the world’s cheapest car – priced between €2,246 and €3,100 – by reaching out to middle-class buyers for whom it was intended originally but also to try to make financing easier.

Company officials said they were trying to improve “interaction” between the customer and the financier and had even launched an exchange scheme under which the owner of a two-wheeler could trade in his vehicle for a Nano, its value adjusted against the car price.

“We are trying to bridge the gap between a two-wheeler buyer and a car buyer,” company officials said.

And to woo potential customers in rural areas who had neither driven a car nor visited an automobile showroom, Tata plans to set up kiosks in the countryside.

Company officials said this was being done primarily to dispel the perception that advance bookings were required to acquire a Nano. “People still think the Nano is sold through the booking process, which makes them believe there will be a waiting process. We want to remove that perception,” Tata Motors vice-chairman Ravi Kant said.