Thursday, September 15, 2011

Tata Motors to give discounts to Shareholders on Tata Nano

After cajoling the employees of the Tata group to buy the Nano, Tata Motors is trying to persuade its 3.5 lakh shareholders to purchase the world’s cheapest car — at a discount.

The move is seen as an effort to crank up the sales of the Nano, which have declined at an alarming rate over the past three months.

The company, however, has declined to comment on its latest overture to the shareholders.

Earlier, Tata Motors had offered the car to the employees of Tata group companies at sharply reduced prices.

It is learnt that the employees were offered a discount of Rs 25,000 on the high-end variant of the Nano, which carries an ex-showroom price tag of Rs 2.11 lakh in Mumbai.

Sources said the discount to the shareholders would be slightly lower than that for the employees.

The Nano has been Tata Motors chairman Ratan Tata’s dream project ever since he conceived the idea for it in 2005. It was formally launched in Delhi in January 2008.

With inventories starting to pile up, the Rs 52,136-crore auto maker went in for a planned maintenance shutdown of its Sanand plant in Gujarat for about two weeks in August. The plant, inaugurated in June 2010, has an installed capacity to produce 250,000 cars a year. It produced just 56,886 units last year.

A combination of factors — an industry-wide slowdown, hiccups in distribution and higher interest rates on loans — has led to the slide in Nano sales, industry sources said. Higher fuel costs since the Nano’s commercial launch in March 2009 and an increase in the price of the car to offset rising input costs have also deterred potential buyers.

 In August this year, Nano sales fell 85 per cent to 1,202 units compared with the year-ago period even as the total sales of Tata Motors declined 3 per cent during the same month. In July this year, the sales of the small car were down 64 per cent.In June, Nano sales dipped 29 per cent.

Ratan Tata has been closely monitoring the Nano and is involved in determining the future course of action to bolster sales of the car that once held out the promise of being an affordable alternative to two-wheelers.

Ratan Tata has been visiting smaller cities such as Patna to obtain first-hand customer feedback, assess the bottlenecks and understand the problems that the Tata dealers face.

As part of the recent scheme to sell the Nano to the employees, a signature of the group chairman was imprinted on the dashboard of a special edition of the car.

On a broader scale, Tata Motors is looking overseas to shore up sales. It is aiming to establish assembly facilities for the Nano in Indonesia and Eastern Europe and has plans to set up similar facilities in Brazil and Southeast Asia.

“The Nano is being sold in Sri Lanka and Nepal. We are looking at assembly facilities possibly in Indonesia and some parts of Eastern Europe. On the whole, we are looking at how we can maximise the penetration of the Nano and some of the other products such as the Ace,” Ratan Tata said at the automobile maker’s annual general meeting recently.

Source: The Telegraph

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