Tata Motors bets on Nano to beat slowdown

Wednesday, 02 July , 2008

Tata Motors seems to be banking on very large sales volumes from 'Nano' to beat the impending slowdown.

Even as he concedes that the year ahead would be challenging, with higher fuel prices impacting sales of both commercial vehicles and passenger cars, chairman Ratan Tata is confident Nano sales would be high.

In the company's latest annual report, Tata says "the high volumes of the Nano range will dramatically change Tata Motors' market position, reach and visibility".

Though he has neither outlined a sales target for the Nano — expected to hit the market sometime during the last quarter of the year — nor explained the reported scaling down of production targets from Singur, Tata's optimism may not be misplaced despite the slowdown.

Projections by independent think tank Global Insight support Tata's claims. It had earlier projected that 53,490 units of the Nano would be produced in 2008, which would be scaled up to 3,74,373 units by 2009 and 5,22,342 units by 2010.



In its latest projections, Global Insight has pegged total vehicle sales from Tata Motors' stable at 5,83,179 units for 2008, but projected a dramatic rise to 8,01,307 units next year and 9,32,052 units in 2010. Such a jump is impossible to achieve unless sales of the Nano are multiplying in the next two years.

Then, while skirting the issue of whether the Singur plant would begin commercial production on time, Tata said in the annual report "(it) is expected to go into operation in the last quarter of this calendar year"

Acknowledging that the market scenario in the current year would be difficult, Tata has pointed towards higher fuel prices, "enormous and unprecedented increase in material costs in steel, tyres and the like" and the impact of tighter money supply with higher interest rates as some of the factors contributing to a slowdown.

He has also made a mention of "managing the completion of Singur plant and introduction of the new Nano in the market" besides having to absorb the cost of the Land Rover, Jaguar acquisition while cautioning on sales projections for the year

source:sify