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Tata Motors has resumed production at its Nano car plant at Sanand, Gujarat after about a fortnight. Work at the plant had been suspended for “maintenance, and to rationalise and align inventory”, a company statement issued on Saturday said.
Sales of the small car, touted as the world's cheapest four-door hatchback when it was unveiled in 2008, have been erratic over the past year. This, even as a senior company official said in April that by fiscal-end Nano's monthly production would increase to 20,000 units from 10,000 units – which is almost full capacity for the 2.5 lakh unit a year plant.
Falling sales
Interestingly, in July this year, Nano sales fell 64 per cent to 3,260 units, a far cry from the peak of 10,012 units it saw three months back in April.
When asked, the company spokesperson did not say what the monthly production level for the Nano is now likely to be, though the company feels its increased marketing efforts is showing good signs. The company is taking various measures to improve sales, including adding export markets, opening 300 Nano-only sales outlets in rural and semi-urban regions and offering attractive finance schemes.
“The month, however, is witnessing very encouraging response to consumer-oriented marketing efforts from Tata Motors, resulting in increasing inquiries and footfalls at the company's showrooms,” the statement said.
For the Sanand plant to become cost-viable with the Nano, Tata Motors should sell around 25,000 units of the car each month, a sector analyst with a leading consultancy firm said.
“At this point, the most important thing is to stabilise numbers while looking at the future demand situation as well. They have to make sure that the demand and production are in sync,” the analyst said.
Tata Motors could also look to add production of more vehicle models such as the Ace LCV at the plant to make it more viable - especially since input costs are steadily rising and the company has very small room to increase product prices, another industry expert said.
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