Nano continues to be a loss making product for Tata Motors

Parichay Malvankar
Written by Parichay Malvankar

We truly believe that the Tata Nano when launched, was an engineering marvel. To deliver a car at that cost to potential car buyers was a bold move made by Tata Motors. However, a chain of bad decisions plagued the success of the car even before it hit production.

Later, Tata’s own marketing team killed the product by pitching it as the worlds cheapest car. Had it been called the Indian Smart Car, may be things could have been different. But all is said and done now, and the Nano continues to stay on sale in Tata showrooms. However, sales numbers have been so poor compared to competition, that it clearly shows that the market sentiment towards this little car isn’t that good.

Tata sold just 260 units of the Nano in July 2017. That is not even 1% of the sales compared to the Maruti Suzuki Alto. Says quite something doesn’t it?

Now, a new statement released reveals that the Tata Nano incurs major losses to the company. A bold product that was believed to change the tables for Tata Motors is now just letting the company bleed from the bank.

As regards the Nano. The project as conceived was indeed brave. For a number of reasons, the car was not profitable many years. During my time as chairman of Tata Motors we tried to make significant products improvements based on market feedback such as an openable tailgate, power steering and an AMT version. All these initiatives did not bare fruit. It was only then that an unanimous decision was taken to discontinue the Nano Production. It has been almost one year since then.

In my representations, I had drawn attention to potential areas of conflict of interest in the supply of Nano body shells to Jayem motors where Mr. Ratan Tata has made investmentsin his personal capacity, thus forcing the Nano production to continue on a subscale basis for almost one year after the original decision had been taken. As I understand the Nano today, continues to incur heavy losses. At the very least this continuous loss for nearly a year has depressed the share value by thousands of crores on the present PE multiple.

I am also surprised to see complete silence from the board when it comes to the issue of sharing confidential detailed cost information about the Nano Cars to Mr. R. Venkatraman who used to be on RNT associates and conflicted, which is substantiated by the e-mail trails in my submissions and available to the board.

Statement from Office of Cyrus P. Mistry

About the author

Parichay Malvankar

Parichay Malvankar

Founder, owner and editor-in-chief of www.Shifting-Gears.com; a born gearhead, nothing apart from a set of wheels gets his pulse racing.