Industryweek 4659 Tata Cng

'World's Cheapest Car' Getting Pricier

June 21, 2013
Auto analyst Mahantesh Sabarad of Fortune Equity Brokers said the CNG version is being introduced to "give customers a better choice" but may take away its "affordability" tag.

MUMBAI - India's top automaker Tata Motors unveiled a new version of what was once billed as the world's cheapest car Wednesday, in a bid to reverse a slump in sales.

The jellybean-shaped Nano, which sold for around $2,200 when its first edition went on the market in 2009, has seen sales drop by more than 27% in the last year and Tata's recently-retired supremo admitted the car had an image problem.

The compressed natural gas (CNG)-fuelled version of the Nano unveiled on Wednesday is expected to hit showrooms within the next 90 days, the company said.

Tata Motors did not disclose the CNG Nano price, but said it would be announced soon.

"This (CNG) is the first major variant for the Nano since its launch," auto analyst Mahantesh Sabarad of Fortune Equity Brokers said.

Sabarad said the CNG version is being introduced to "give customers a better choice" but may take away its "affordability" tag.

It was not immediately clear whether the Nano would retain its title as the world's cheapest car.

In an interview shortly before his retirement last December, the company's long-time chairman Ratan Tata said it had been a mistake to market the Nano merely on its low-price, saying "various stigmas have been attached to it."

Sales of the part-plastic Nano fell 27.7% in the fiscal year to March 2013, to 53,847 units, according to company data.

E-Max Part of Larger Launch

Since its launch, the Nano has had several small makeovers - including upgrades to its interior and a doubling of the warranty to four years.

The unveiling of the CNG Nano - called E-Max - was part of a mega launch by Tata Motors at its factory in Pune where it also introduced new versions of its existing Nano, the hatchback Indica and Sumo sport-utility vehicles.

The enhanced Nano - with features like remote locking and sleeker interiors - will cost upward of 150,000 rupees (US $2,580).

In recent quarters, Tata Motors' earnings have been boosted by the performance of its luxury brands Jaguar and Land Rover, which have compensated for its weak domestic car sales.

Automakers in India have witnessed an unprecedented seven straight months of lower car sales, due to a slowing economy and a rise in the cost of raw material.

In May, Tata Motors' total domestic passenger vehicle sales fell 45.69% at 11,134 units, from levels a year earlier.

"The market has been bad in the past two months but since then there has been some improvements," managing director Karl Slym told reporters Wednesday, according to the Press Trust of India agency.

Tata Motors bought Jaguar and Land Rover from Ford Motor Co. in 2008 for $2.3 billion as part of plans to expand its reach beyond Asia.

The deal vaulted Tata Motors from a commercial vehicle and small-car maker into a global player whose portfolio includes luxury brands.

Copyright Agence France-Presse, 2013

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