The Tata Nano’s recent not-so-nano party in the used-car market seems to be fizzling out. Resale premiums on the “Rs1 lakh car” have fallen from highs of Rs 35,000 in September to just about Rs10,000 now. And, dealers expect used cars to be available at a discount in a month.
Raj Sethi, proprietor, Popular Car Bazaar, one of the largest used-car dealers in the city, said, “Many brand new Nanos were coming to the used car market as Tata Motors had not permitted the transfer of allotment (the car was delivered and registered in the allottees name only). Most of the cars were sold off at a premium to other buyers. However, after the initial rage, there seems to be no demand for Nano now.”
He added that despite putting up advertisements of Nano available at their dealership, there are no buyers now. “It’s difficult to sell the car at the company price, let alone at a premium,” Sethi said.
Popular has, in the last one and a half months, sold 5 Nanos. “Currently there is one on sale… Though the customer is asking Rs10,000 as a premium, he is willing to sell the car even at a loss,” Sethi added.
Given the festive season, Sethi feels the demand for second-hand Nano might pick up post the third quarter, but it will certainly not sell at a premium. “In the next one month, Nano will either be sold at the company price or below that - in next two months, the price will be Rs 25-30,000 less than the company price and by next March it will be Rs50-60,000 below the company price”.
Tata Motors launched the Nano on March 23. Tata hasn’t permitted transfer of allottments to discourage bulk buying and illegal sale of allottments.
Had it been allowed to transfer allottments, dealers/investors would book multiple cars for investment sake and sell them when they got allottment. This would have also defeated the prime purpose of taking the Nano to its actual users at the right price.
However, the pull from that segment was strong and the car did end up there. The company has delivered 7,500 vehicles so far.
According to Banwari Lal Sharma, assistant vice-president, CarWale, a website for used cars, the excitement for the Nano is dying down as the car has failed to meet expectations. “The hype every new product creates could not be sustained for Nano for too long. People had high expectations from the product and my reading is that the car has not been able to meet people’s expectations. People also could not test drive the vehicle before purchasing it.”
“The amount of premium Nano owners are seeking in the used-car market has dropped drastically from what it was a month back. Whether without any premium or even at a loss, they are willing to sell,” Sharma said.
Ayaaz Fazulbhoy, director, Fazulbhoys Motors, another large used-car dealer, expects prices of used Nanos to crash. “The absence of a name-transferring arrangement and the need to pay Rs50,000 (road tax and octroi charges) 4-6 weeks before delivery has discouraged speculators,” Fazulbhoy said.
“The true impact on the used-car market will be known only once Tata Motors’ Sanand plant comes on-stream (in December) and we see volumes flowing in for Nano. My suggestion would be to sell it off at whatever price one gets as the price for this car in the used-cars market is bound to crash. Many new small cars are set to hit the market, which will dent Nano premiums.”
The Nano space has been turbulent with the much hyped launch, followed by damp bookings of 2 lakh (against the sale of 6 lakh forms) and then a spate of cancellations, which has led to advancement in the deliveries of the car.
As per the earlier schedule, Tata Motors was to complete deliveries to one lakh allottees by the last quarter of 2010 and for the 55,000 retainees within 2 years from the date of allotment.
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