Tata Motors Sees Sales Slide 13%

New Nano car won't lift company's bottom line for awhile

India's top vehicle maker Tata Motors has reported a 13% fall in domestic sales for March as a slowing economy hit demand for its commercial vehicles.

The company said total sales for the year to March, including exports, were 498,581 vehicles, 14% below the 582,390 it sold a year earlier.

"The financial stimulus announced by the government, particularly for commercial vehicles, has had a positive impact," the company said. "But the retail market would still take some time" to rebound to last year's levels, the statement said.

The announcement comes as the company gears up for sales of what has been dubbed the world's cheapest car, the Nano, which opens for bookings next week.

The $2,000 Nano went on display in showrooms across India on April 1 and buyers will be able to make reservations for what has been dubbed "The People's Car" from April 9.

The firm could sell just up to 50,000 Nano cars in the first year, with production limited because of a violent land ownership dispute that forced a shift in production from West Bengal state to Gujarat in the west. The first Nanos will roll out from existing plants, until the new Gujarat plant opens late this year or early next.

Despite its expected popularity, analysts say the Nano will not make a big contribution -- at least in the early years -- to the company's bottom line with profit margins seen as slim in the fiercely competitive small car segment.

India's vehicle sales have been hit by a weakening domestic economy, amid a credit squeeze and job concerns for India's vast middle-class.

Earlier this month, Standard and Poor's downgraded the credit rating of Tata Motors, citing "a material deterioration" in its cash flow and high debt as chief concerns.

The launch has come as Tata is also struggling to absorb British luxury marques Jaguar and Land Rover which it bought last year and whose sales have also fallen.

Copyright Agence France-Presse, 2009

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