Monday, June 29, 2009

Nano to rule cities as green norms push M800 off road

The world’s cheapest car, Nano, is likely to wrest the leadership position in the small car segment within a year as the ruling market leaders — Maruti 800 and Omni — will no longer be sold in 11 of India’s biggest cities from January 2010 because of failure to meet current emission norms. These cities account for one out of two cars sold in the country.

“This (absence of Maruti 800 and Omni) would mean no direct competition to Nano. The important question is whether Tata Motors would be able to manufacture enough units of Nano that would meet the demand.” said Kapil Arora, Partner (Automobile), Ernst & Young.

Although Nano could become the highest selling car in its segment, it would take some time to contribute to Tata Motors’ sagging bottomline. Mr Arora said Tata Motors, which suffered a Rs 2,500-crore loss last year largely due the tribulations of its UK subsidiary Jaguar and Land Rover, needs to sell at least 2.5 lakh units of the Nano to make money from the world’s cheapest car. The company may be in a position to produce the Nano in these numbers only by the end of 2010 once its plant at Sanand, Gujarat becomes operational.

The entry-level Maruti 800, the flagship product of Maruti Suzuki India, is priced at Rs 2.15 lakh. The basic version of the Nano is pegged at Rs 1.35 lakh though other version with more more features cost more.

“The pricing strategy of the product is not decided yet. The price of the Nano could go up. The margin at the moment is wafer thin, “ he added. The company spokesperson said: “The first one lakh allotments (of the Nano) are price-protected as prices were declared at the launch. For others, should circumstances require any pricing decision, it will be intimated to them (customers who have booked the car) at the time of delivery.” The company is also planning to launch the diesel version of the Nano. There has been speculation that the diesel Nano could cost around Rs 2 lakh, making it the cheapest car in the category.

No comments: