Due to production constraints, the company has not yet delivered the Tata Nano to its selected 1 lakh customers, which may delay its open market sale by a few months

Tata Motors Ltd, India's largest vehicle manufacturer, is yet to finish deliveries of its Tata Nano to its first 1 lakh selected customers. During June the company delivered over 250 Nanos per day to customers from its new Gujarat-based Sanand facility. However, since the Sanand plant is increasing its capacity in a phased manner there are limitations on the number of Nanos available for delivery. This will also delay the open market sale of the Nano by a few months.

While there are reports that the Nano is available in the open market under the management quota, a company official said that it will make appropriate announcements on future sales of the car.

Tata Motors' Sanand facility, which has a capacity to produce 2.5 lakh Nanos per annum, became operational last month. "The new Sanand plant has begun commercial production, and despatches from the plant have begun in June 2010. Its capacity is 250,000 (vehicles) per year and the ramp-up will be done in phases. At present, the Pantnagar plant continues to supplement (production of the Nano at) Sanand," the official said.

Although the company has not provided any figures, according to media reports, till June end, Tata Motors may have delivered 45,200 Nanos out of the one lakh orders. The company's plant at Pantnagar in Uttarakhand has a capacity to produce about 50,000 Nanos per year or about 4,200 Nanos per month.

Tata's Sanand plant, although operational, has not yet reached its peak. According to a PTI report, vendors of Tata Nano are currently supplying components for an average of about 10,000 units a month. Vendors have been told to scale up supply by three times by March 2011, the report said.

According to a report by the Society of Indian Automobile Manufacturers (SIAM), during June, Tata Motors produced 6,019 units of the Nano, taking its total production in the first quarter to 14,911 units. Similarly, during the month, Tata Motors sold (and delivered) 7,704 units of the Nano, taking its total sales during the first three months of FY11 to 14,779 units.

While the company is talking about increasing production capacity at Sanand in phases, actual deliveries and production figures provided by SIAM tell another story. While Tata Motors may be receiving over 4,000 units of the Nano from its Pantnagar plant, during June, its Sanand plant produced only around 2,000 units. In this scenario, even if the company ramps up capacity at Sanand, actual delivery to the first selected 1 lakh customers is likely to take a few more months. This also means that the Tata Nano will not be readily available off the showroom the in the near future.

The car was a huge hit among the middle class, with almost 2,03,703 people going for the advance-booking route in June last year. At that time, Tata Motors shortlisted 100,000 owners through a computerised random selection process. The company had claimed that the cars are 'price-protected and people will get their dream vehicles at ex-showroom price'. In addition, there was a waitlist of 55,021 customers.

"On 23 June 2009, Tata Motors had declared 100,000 customers. The deliveries began in July 2009. The 7,704 cars sold in June 2010 are part of this ongoing delivery process to the allottees. Our objective is to complete this expeditiously. The company will make appropriate announcements on future sales of the car," said the company official.

SIAM categorises both the Tata Nano and Maruti Suzuki India Ltd's Maruti 800 in the 'A1 mini' segment. Despite non-availability of the Nano in the open market, Maruti 800 has not been able to take any advantage. During the first quarter to June end, Maruti Suzuki sold 6,906 units of the Maruti 800, compared with 7,119 units during the same period last year.

During FY10, Maruti Suzuki -a subsidiary of Suzuki Motor Corp - sold just 33,028 units of Maruti 800, down 33% from the previous year. At the same time, the company's other vehicles in the 'C' category continue to display good results, 30% higher than a year before. So the question arises, where are the middle-class buyers who were looking out for a low-cost car?

The answer could lie in the sales figures of either 'C' category car sales or higher sales of two-wheelers. During FY10, Hero Honda's sales were up 23.6% to 46,00,130 units while Bajaj Auto's sales were up 30.8% to 25,11,600 units. This means that the migration of customers to low-cost cars from two-wheelers that was supposed to take place did not materialise.

Although Tata Motors is not yet ready to give any assurance for the open market sale of the Nano, looking at the production scenario, we can assume that this will happen before the Dussera-Diwali festival period. — Yogesh Sapkale