Is a rush-hour delivery schedule the reason behind these 'dumped' Nanos?
January 8, 2010
On Thursday, Moneylife published a news report about several Tata Nano cars being kept in a 'dumped' condition at Kalyan, near Mumbai. We tried to contact everyone, including Tata Motors officials to know the reason behind this, but they were all busy at the Auto Expo.
We finally received a reply from a company official that says, “No, it is not routine for Tata Motors to keep cars in that manner. Given the rush for deliveries for the Nano, this is the first time we have begun to use railway rakes to despatch cars, and hence the required infrastructure is not up at the required railheads. We have thus far despatched cars only by car carriers to dealerships in numbers they can accommodate at their premises."
The Nano cars you have seen at Tisgaon Naka, have arrived by railway rakes, for onward distribution to our dealers in the region, by car carriers. Since dealership premises have limited space, they are being sent in batches to the dealers. It is needless to mention that before delivery to designated customers, each car is thoroughly checked at the dealerships through our pre-delivery inspection process," the official added.
According to this response, the local dealer must have kept the vehicles at that particular ground. We called the Tata Motors local dealer from Kalyan, Balaji Cars. Surprisingly, no one was willing to talk, officially or unofficially. One person admitted that last month they had sold or rather delivered 40 Nano cars to customers in and around Kalyan.
So if this dealer does not have space to accommodate all the Nanos ordered by him, how did he get the delivery of these vehicles? And second, according to the image, there were more than 100 Nanos kept at this ground which definitely is not the dealer's premises.
We contacted another dealer located at Prabhadevi in Mumbai, which was the company's official showroom. According to Mayur Adivarekar, the in-charge there, they had around 70 bookings for the Nano and four customers have paid the full amount and were waiting for delivery.
Taking both the Kalyan and Prabhadevi dealer comments into account, on face value it appears that there is a good response for the Nano in Mumbai suburbs rather than the city. While there may be hundreds of customers in the suburbs waiting for Tata Nano deliveries, at the same time, it looks like city customers may not be interested in the vehicle or may be opting for other cars. We came across several car dealers who said that instead of waiting for the Nano delivery and finally paying about Rs2 lakh, it made sense to go in for a second-hand car, like the Maruti Zen or Hyundai Santro.
Moneylife has been writing about the cancellations of Tata Nanos, since August last year. This was largely because prospective Nano customers seem deterred by the huge gap between booking and the actual car delivery date coupled with higher interest rates charged by various banks.
At that time, Tata Motors shortlisted 1,00,000 owners through a computerised random selection process. The company had claimed that the cars were 'price-protected' and people will get their dream vehicles at 'ex-showroom price'.
However, many among these 1,00,000 selected owners and 55,021 in the waitlist were seen pulling out of the deal. The spate of withdrawals has taken everybody by surprise, although Tata Motors had pledged to shell out an interest of 8.5% on the booking amount to the waitlisted customers on the terms that the car would be delivered within two years from the date of allotment (23 June 2009) or will pay 8.75% interest if the car is delivered after two years from the date of allotment.
The fact that the customers need to pay interest first and enjoy the car ride later did not go down well with many prospective Nano buyers. Around 70% of Nano bookings were made through bank loans, with interest rates varying between 10% and 12% on a booking amount of Rs90,000 to Rs1,40,000.
For example, a borrower who had opted for a loan of Rs1,20,000 for a three-year period will be forced to shell out a monthly instalment of Rs4,000, when he is getting his dream car only after two years.
Though extended delivery time is the key reason, a few from the 1,00,000 shortlisted customers have also opted to cancel their bookings. Besides banks, some Tata Motors dealers also confirmed the Nano cancellations. "There are several cancellations, but they are at Tata's end," said one Mumbai-based dealer. Nearly 1,00,000 people who were certain to receive the low-cost car will now get it by the last quarter of 2010.