With sales taking off, Tata Motors will make 50% more Nanos in January

Spurred by the fast offtake of the world’s cheapest car last month, Tata Motors is ramping up production.

According to vendors, the company will now make 300 Nanos a day — this translates to a 50% jump from 200 a day being manufactured in December.

Eventually, vendors have been promised a spectacular ramp-up so that monthly production touches 15,000 units by March.
A Tata Motors spokesperson said, “Our ramp-ups are as per plans and we cannot reveal specifics.”

In all of 2010, highest-ever production in a month reached only 7,739 units in August, so the company is basically promising vendors almost double this number in just three months!

While stepped-up marketing efforts have helped push up sales and attractive finance schemes have added to the general feel-good factor, perhaps Tata Motors’ decision to scale up production substantially also comes from the fact that it is unable to completely fulfill demand from dealers.

A large Tata Motors dealer in Maharshtra says he has virtually exhausted stocks. “I asked for 7,200 Nanos more but Tata Motors said it cannot supply such a huge order immediately....while this may have to do with which colours I need more but largely, this shows that the company has been able to sell most of the cars it made in December,” the dealer said. Earlier this month, the company opened up Nano sales pan-India, further enhancing reach for the car.

But will stepping up production sustain Nano sales going forward?

A vendor pointed out that his community was watching the situation and the “key is to see sustainability (of such production levels) for three months. If Maruti Alto can sell close to 30,000 units in a month, there is no reason why Nano cannot improve sales exponentially.”

Already, Tata Motors appears to have taken a leaf out of Maruti’s books by offering Nano at attractive interest rates to employees of its dealerships.

The scheme allows employees of delaerships, earning just between Rs12,000-15,000 a month, to buy the car at attractive rates and they are also being allowed to repay loans over longer time periods.

Sandeep Agarwal, CEO of Delhi-based dealership Him Motors said the dealership employee scheme for the Nano shows that the company has finally been able to reach its target customers.

“Nano sales have picked up in secondary markets in December and under this scheme - which was launched a few days back - even workshop staff is buying these cars. Nano sales have improved significantly in December”.

Another Delhi-based dealer said that though enquiries and footfalls have increased by 10-15%, sales will take time to pick up substantially.

But trouble spots still remain. Though dealers said that incentivisation for selling the Nano hasn’t improved beyond the 3% commission rate, there were indications that Tata Motors is still expecting sales of its other cars - Indica, Indigo etc - to subsidise sales expenses for the Nano.

A large dealership in Delhi has already decided to give up Tata Motors’ business - perhaps because it found the commission unattractive across its entire passenger car range.