Tata Motors it appears has cut production of the Nano at its Sanand plant by over 80%. The Tata Nano factory at Sanand, Gujarat, is said to be operating on a single shift with a four day work week. This move from Tata Motors has to do with falling sales and rising inventory levels. The sales of the Nano has hit a big trough with the car selling about 1,500 units in each of the first two months of this year. The factory at Sanand has the capacity of building 250,000 Nanos each year. To make money on the Nano, Tata Motors needs to utilize 60% of the Sanand factory’s capacity.
Tata Nano Special Edition Hatchback
In other words, Tata Motors needs to sell 150,000 Nanos a year or about 12,500 Nanos a month. Considering the Nano’s sales figures over the last 12 months, a monthly sales of 12,500 units remains a pipe dream as of now. Tata Motors will launch a facelifted version of the Nano with a slew of changes soon. Click here to check out our exclusive spyshots of the 2013 Nano Facelift. The facelifted model of the world’s least priced car is expected to give the sales numbers the much needed momentum. Tata Motors also has the CNG and diesel versions of the Nano waiting in the wings.
Together, the petrol, CNG and Diesel variants of the Nano could deliver monthly sales of over 12,500 units for the Nano. However, the CNG powered Nano is not expected to be launched before the middle of this year while the diesel variant is expected only in early 2014. So, it could still be a while before the Nano’s sales pick up. Now that the Sanand plant is said to operating at a hugely reduced output, the vendors who’ve set shop around the factory will also be hard hit. The whole premise around the Nano was that the car would sell at a terrific clip of 20,000+ units every month, allowing the vendors to recoup their investments of producing parts at ultra low costs.
Since this hasn’t happened, a lot of vendors and suppliers for the Nano project are said to be losing money and reports from Sanand suggest that like Tata, many vendors have cut output. While Tata Motors does export the Nano to countries like Sri Lanka and Nepal, the volumes from exports are still very low to compensate for the falling demand in the domestic market. By the looks of it, it seems like it’ll take one hell of an effort to turn around the Nano’s fortunes in India.
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