Tata Nano sales nosedive in November despite festival season

Tata Nano sales have dropped drastically despite Tata Motors attempting new tactics such as selling Nano cars in exchange with two wheelers. In November 2010, the company sold a mere 509 Nano cars which was just one sixth of the October sales (3065 units).

This is a serious matter, when you remember that November is festival season and car sales have gone up for almost all major manufacturers in the month.

The world’s cheapest car has been kept at arm’s length by first time small car buyers due to various reasons. Lingering safety concerns are believed to be the major factor, after some widely reported instances of smoke, sparks and a fire.

Photo: Tata Nano

Last month, Tata Motors said that it would request Nano customers to bring their car to its service centres so that they can add safety devices to prevent the car from catching fire. The company denied it was a recall and the fitting of safety devices is optional as it assured that Nano cars are safe and met all the safety norms just like any other car sold in India.

Considering the inconsistent sales of Tata Nano in the past three months, November (509 units), October (3065 units) September (5, 520 units), the downtrend if it continues could spell trouble.  Making the car available off-the-shelf in many states in the country does not seem to have worked either.

Tata Motors has been delivering its Nano cars to the customers who booked it last year and had been waiting for almost a year to drive home their Nano. And the new customers are quite hesitant to buy the car mainly because of the six incidents of Nano catching fire had been reported since the car’s commercial launch in March 2009.

In the end of 2009, several such stories of Nano catching fire emerged, but it had turned out that in most of the cases, it was a minor short circuit or localised meltdowns. Three such instances were reported then. In 2010, during March, April and August, 3 fire incidents were reported. The Nano cars in these 6 fire incidents belong to different owners located in Mumbai, Lucknow, Delhi and near Vadodara in Gujarat.

While Tata Motors did not react immediately for the first few fire incidents which involved the melting down of Nano’s interiors, the matter became worse in the remaining incidents when the cars were fully burnt down to ashes.

Tata Motors announced that an internal probe conducted by the company reports to a “foreign object” in the exhaust system being the cause of the Nano car fire in Mumbai. It also states that the Nano car that caught fire in Gujarat had a ruptured fuel line. According to the report, there were no manufacturing defects in the vehicles and the two instances of fire were isolated incidents. However, Tata did not reveal the nature of the “foreign object” that was discovered in the Nano that caught fire in Mumbai.

Tata has also announced that it will seek to reassure consumers about the safety of the vehicle by conducting pre-emptive checks on all on-road Nano cars. The process would start from May 24 onwards by contacting all Nano customers individually and fixing service appointments with them. The service, that includes providing additional protection wherever necessary, will be conducted free of charge. However, the company clearly stated that the move was not a recall, like the one conducted by Toyota and Honda.

By the third week of November, Tata Nano owners will be asked to bring their cars to Tata service centers to fit some safety equipment for free. The corrective measures include fitting a cover for the catalytic converter, adding a fuse in the electrical system to prevent short circuits and replacing the starter motor (the last step is only for Nano cars that were produced before January 2010).

Though the Tata Nano is still the cheapest car in India, rising costs of raw material such as steel and rubber have forced carmakers to hike prices of their products. And Tata Motors is no exception. In July 2010, Tata hiked prices of all the three Nano variants—Std, CX and LX—by 3-4 percent (between Rs. 3,700 and Rs.6,894, ex-showroom Delhi).

Early November, Tata motors announced another price hike for the Nano. Prices of the Nano will be Rs. 9,000 more than the current prices depending on the city and model variant. But the company said that the first 1.5 lakh customers who had booked the car in 2009 will not face the hike.

In November, Tata Motors launched an exchange offer where the company has started offering its cars in exchange for any two-wheeler. Starting from Nov. 3, Tata Motors is offering Nano off-the-shelf, through open sales without bookings.

Vishal Vashishta, a company manager said the Nano can be bought through and exchange offer with attractive EMIs. For the exchange offer, the company has tied up with the State Bank of India (SBI) to provide hassle-free loans offering EMIs as low as Rs. 1,960.

Tata Motors has invested a lot in Nano and the fire incidents have slowed down the sales. But, the company is not giving up that easy. Tata Motors is planning to launch an upgraded and more powerful variant of its cheapest car, Nano, called the Nano Plus in 2011. The name might change when the actual launch takes place, though. related: Tata cars in India

Tata Motors is ultra quick in reacting to the customer feedback and hence, has decided to give more power and upmarket features to Tata Nano in order to keep its sales ticking. It will come with a 1-litre petrol engine that will churn out more than 60 hp of power and a better torque compared to the present 623 cc mill that produces a mere 34.55 hp of peak power and 48 Nm of maximum torque. There is, however, no official statement regarding the engine specifications of the new model.

The Nano Plus would come with improved interiors, an integrated audio system alloy wheels and ABS. Also, the Nano Plus is likely to borrow design cues from the Nano Europa concept car. The Nano Plus would surely be no “world’s cheapest car.” There is no official word on the pricing but we expect it to be around Rs. 45,000 more than the top-end Nano LX variant.