Tata May Get 500,000 Orders for World’s Cheapest Car (Update1)
By Vipin V. Nair
March 25 (Bloomberg) -- Tata Motors Ltd., the Indian maker of Jaguar and Land Rover luxury vehicles, may get as many as 500,000 orders for the Nano, the world’s cheapest car, five times more than it initially plans to sell, analysts said.
Bookings for the egg-shaped Nano may range from 120,000 during the first two-week sales period before 100,000 buyers are allocated by lottery, according to a poll of six analysts surveyed by Bloomberg.
Chairman Ratan Tata is guaranteeing the cheapest price for only the first batch of cars, betting the economic slowdown will lure customers even though orders won’t be completed for more than a year. The Nano will sell for as little as 123,360 rupees ($2,432) in New Delhi for the basic model without reclining seats, air-conditioning or a radio.
“It will be a tedious task for Tata to manage the bookings since the production is less and the demand is huge,” said Puneet Gupta, an auto industry analyst at CSM Worldwide Inc. “In four to five years, the Nano is going to play a big role.”
One million of the aluminum-framed vehicle may be sold each year as families swap motorbikes for the four-door Nano, Ratan Tata said March 23. Sales of two-, three- and four-wheelers surged 59 percent in the past five years to 9.2 million units, according to the Society of Indian Automobile Manufacturers.
“The present economic situation makes it somewhat more relevant, or more attractive, to the buying public,” Ratan Tata said. “We had thought that there could be demand in this country for about one million cars if full capacity were available and if demand continued.”
Shares Fall
Tata Motors shares declined 3.1 percent to 157.5 rupees at 10:05 a.m. in Mumbai. The stock has slumped 75 percent in the past year, compared with a 38 percent drop in the benchmark Sensitive Index.
Tata Motors delayed sales of the two-cylinder, 624 cc Nano by at least six months after a land dispute forced it to shutter a purpose-built factory in the east of the country.
The first Nanos will now roll out in July from a plant at Pantnagar, northern India that can produce only 60,000 a year. Annual output will increase by a further 350,000 when a facility at Sanand, western India, is completed at the end of this year.
Managing Director Ravi Kant declined to say on March 23 how many orders Tata Motors expected to receive. The company’s Web site has received 30 million hits, Kant told reporters in Mumbai.
The analysts estimated Tata will get between 120,000 and 500,000 orders for the Nano during the initial sales period from April 9 to April 25.
State Bank of India, the nation’s largest, will manage bookings for the car in about 1,000 cities across India.
Down Payment
Prospective buyers need to pay 95,000 rupees as down payment for the cheapest model, equivalent to 95 percent of the 100,000 rupee price tag.
The top of the range version with central locking and metallic paint will cost 172,360 rupees in New Delhi and 185,375 rupees in Mumbai where sales taxes are higher.
Tata Motors may sell as many as two million Nanos annually in 10 years, according to Jatin Chawla, an analyst at India Infoline Ltd., who wrote a report titled the “Nano Effect.”
The company plans to start selling a modified version in Europe in 2011 and is working on redesigning the Nano for the U.S. within three years, Ratan Tata said.
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