The Hindu Business Line : Nano effect likely to be felt across user segments

Mumbai, March 17 Even the fiercest rivals of the Tata Nano are hoping that the car does well as it will give the much needed boost to market sentiment, which is low despite all the talk about the Centre’s fiscal stimulus having worked wonders.

Currently, the only carmaker that is keeping its ancillary suppliers and dealers happy is Maruti Suzuki. It is tipped to end March with sales of nearly 85,000 cars, which will be its highest recorded in a single month, surpassing the levels in February. Maruti is now set to launch its Ritz (Splash in other markets), which could replace the Wagon R next month. But even this may not be enough to grab the spotlight from the Nano.

Likely Demand

Indications are that this “people’s car” from Tata Motors, being launched next week, could end up with over three lakh bookings despite the possibility of a hefty down payment of Rs 70,000. This is a considerable sum for a car whose basic version will cost barely Rs 1.3 lakh (on-road Mumbai). As sources say, it is a clear reflection of its manufacturer’s faith in the Nano whose demand in smaller cities and towns is going to be “completely overwhelming”.

There have been talks of competitors, like Maruti, going in for stripped-down versions of its base models, but even that will not be adequate to take on the Nano in terms of price.

The only other car that caught the public’s fancy (and this was way back in 1995-96) was the Fiat Uno, which garnered over 2.9 lakh bookings.

Touted as the challenger to the Zen, it was poised to create history in the compact segment but lost its way thanks to a lockout at the plant that threw production schedules out of gear, prompting customers to cancel their bookings en masse. The Uno promised plenty but failed to deliver.

Riding on Brand

Sources say the Nano will face similar challenges in terms of supplies coping with the order book. After all, production is going to be confined to 4,000 units a month at the Pantnagar plant and it is only towards end-January 2010 that the Sanand facility in Gujarat will be ready to roll out big numbers. Despite this, dealers are confident that customers will grin and bear it. The Tata brand is special to most of them and in a sense, waiting for a product only enhances its value in their minds, they say.

So, what is the likely profile of the Nano buyer? Is he/she a two-wheeler user keen on graduating to a car or a first-time car customer who can only afford to cough up Rs 1 lakh?

It could end up being a mix of the two. Someone who owns a premium bike like the Yamaha RZ 15 or the Pulsar would not be inclined to give this up for a basic car. However, the commuter of a Rs 35,000-plus, entry-level motorcycle would quite comfortably upgrade himself to the Nano, sources say.

Covering all segments

According to them, the car’s biggest plus is that it will be relevant to families in both big cities and small towns. To the affluent, it will be the best bet in terms of picking up kids from school or going to the grocer.In towns, families with monthly income of Rs 20,000-25,000 would clearly prefer the Nano for reasons of space and safety in addition to the “status factor” that a two-wheeler cannot confer. This also explains why tractor makers are focusing on customisation of their vehicles so that the end-user in villages finds it handy for uses beyond the farm.

“It finally boils down to finding value at the bottom of the pyramid. Hence, be it a Rs 1-lakh-car or a tractor, the key is application while even doubling up as a status statement in small towns or villages,” says a source.

From the Nano point of view, this buyer segment is critical because the members are not afflicted by the credit card syndrome, like their city counterparts. Neither has the economic slowdown impacted their businesses or lifestyles. Little wonder, therefore, why Maruti, Hyundai and two-wheeler players like Hero Honda are focusing on semi-urban India to bolster business.