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Can't Tell Nano's Road Ahead Right Now: Tata Motors

Tata Motors is finding it difficult to answer queries on whether the Nano will be a part of the journey ahead as the issue is proving to be a sensitive one involving those at the top level of the Tata group.
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Tata Motors  sold 6,714 units of Nano in April-December, as against 17,258 units a year ago.
Tata Motors sold 6,714 units of Nano in April-December, as against 17,258 units a year ago.

Highlights

  1. Tata Motors has adopted new passenger vehicles strategy
  2. Carmaker says it will reduce number of PV platforms to two by 2018
  3. Decision On Nano to be taken as time and need appears, it adds
Mumbai: Remaining non-committal over the future course of its Nano model, Tata Motors said the decisions will be taken in alignment with the board as the time and the need appears.

As it prepares to be future ready, Tata Motors is finding it difficult to answer queries on whether the Nano will be a part of the journey ahead as the issue is proving to be a sensitive one involving those at the top level of the Tata group.

Although the company has adopted a new passenger vehicles (PV) strategy with an aim to achieve "sustainable financial performance" and to be amongst the top three PV makers in India by 2019, its top management is shy to elaborate what role will industrialist Ratan Tata's dream project play going forward.

Tata Motors has said that it would reduce the number of PV platforms to just two from the current six by 2018 when it shifts to what it called as 'Advanced Modular Platform (AMP)' to "deliver 7-8 product variants from two platforms for greater coverage and sizable economies of scale".

Asked whether the Nano will be a part of the company's future by 2018, Tata Motors MD and CEO Guenter Butschek said: "I can't tell you right now because these are decisions in line with the PV strategy. These decisions are going to be taken in alignment with the board as the time and the need appears."

He said the new PV strategy was presented to the board of directors of the company in the middle of last year.

The board is provided update on the progress made on a regular basis, Mr Butschek said, adding, "So it (board) is fully encouraged and (is) behind this strategy."

Under the new PV strategy, the company is looking for economies of scale, reduction in capital expenditure through less number of platforms and addressal of more segments of the market where it is not present currently that will lead to higher profitability.

Yet the issue of Nano is something that hangs uneasy with the company's senior management. Ousted Tata Sons chairman Cyrus Mistry had alleged that the Nano project was responsible for the losses of over Rs 1,000 crore.

Nano has been one of the points of contentions between Mr Tata and Mr Mistry, who had also alleged Tata Motors is unable to shut down the loss making small car due to "emotional reasons" and doing so would also stop the supply of "gliders" to an entity that makes electric cars in which Tata has a stake.

Mr Butschek said the company's presence in the entry-level hatchback segment, where Nano is positioned right now, is something which needs to be decided as it is a very competitive segment.

Stating that in the next few years the segment is going to witness a lot of change in terms of regulations related to safety and emissions, he said the question is whether there is a need to be in the segment or not and that is "indeed a question which is pending".

Industry analysts said that while the company has decided to move on the advance modular platform, "the strategy raises some concerns regarding the future of some of Tata Motors' existing nameplates, most notably the Nano".

"A move to a new platform for the Nano would be likely to increase prices, potentially rendering it uncompetitive. At the same time, stricter regulations in the areas of crashworthiness and emissions will make it difficult for the nameplate to continue on the old platform," IHS Markit principal analyst (World Markets Automotive) Anil Sharma said.

In the meantime, Nano sales continued to be on a downward spiral. During the April-December period this fiscal year, it sold 6,714 units as compared to 17,258 units in the corresponding period last fiscal year - a decline of 61 per cent.

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