The revival in sales of the Nano in the last four months has encouraged Tata Motors to double production plans for the small car by up to 20,000 units a month this fiscal. In March, the Nano sold 8,707 units, nearing its all-time peak of 9,000 units sold in July last year.

The small car, launched with the promise of making safe personal transportation available to billions at affordable rates, had taken a sharp hit in September-November 2010. After selling 8,103 units in August last year, the Nano could only find 509 takers in November. Sales were hit due to safety concerns arising from three fire incidents and a production shift to the current plant at Sanand, Gujarat, from Pantnagar in Uttarakhand. “After the initial lot of customers, the Nano is now reaching out to others who have not been traditional car users, such as bike buyers. We will aim a bit higher in production now (than the original plan to make 15,000 units a month this fiscal). We are targeting a production capacity of 18,000-20,000 a month this fiscal,” a top Tata Motors official told Business Line.

Though the Sanand plant currently produces 9,000-10,000 units a month, its annual installed capacity is of 2.5 lakh units.

After the bad publicity that followed the fire incidents, Tata Motors, to instil confidence in customers, announced schemes including offering a free four-year/60,000-km extended warranty and a comprehensive maintenance contract for new buyers at Rs 99 a month. Tata Motors Finance also promised up to 90 per cent finance for the Nano at easy rates. Volumes for the compact have since picked up; in December 5,784 units were sold, in January 6,703, and February 8,262 units.

“The car mainly took a beating in sales due to quality perceptions. The company addressed this through aggressive marketing and announcing easy finance plans. That paid off,” said a leading vendor to the company.

Indica Sales

In a contrast, sales of the Indica range have been on a decline. Under pressure from growing competition in the A2 segment, the hatchback sold 6,937 units in March (down 40 per cent year-on-year) after selling 10,591 units in January. The Indica range, which includes petrol and diesel models on the new Vista platform, had seen volumes going down to 5,923 units in December. “We expect the new EV2 variant, launched last month, to pick up volumes for the brand,” said the company official.

(This article was published on April 4, 2011)
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