Concerns over lack of safety and the availability of finance have hit sales of Tata’s Nano budget car in India.
Production problems caused by the move to a new plant have also been an issue, said the company, which yesterday reported just 509 Nano sales in November, down 85% on the same month last year.
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Sales of the Nano are now at their lowest level since its launch as the world’s cheapest car.
Concerns have arisen following a series of fires affecting the car, even though the carmaker is offering free safety upgrades.
Sales of the Nano have fallen for four straight months from a high of 9,000 cars in July this year. Fortune Equity Brokers told Agence France Presse that quality perception over safety of the car could be a concern.
The Nano was conceived as the “people’s car” for India’s aspiring middle classes, many of whom currently use motorbikes but want to upgrade to four wheels.
Over 71,300 have been sold since its launch in July last year.
Tata Motors declined to comment on the falling sales but said it is working with financiers to ensure adequate funding at reasonable rates.
The company last month began offering free safety upgrades for the Nano to assure more than 70,000 owners in India that there are no generic defects in the car which costs just US$2,500.
The upgrade involves new safety features being added to the exhaust and electrical system although the company stops short of calling this a recall.
About half a dozen fires have been reported involving the four-door car although there have been no injuries. Tata said an investigation by a team of internal and international experts concluded the reasons for the fires were “specific to the cars which had such incidents” rather than being a general fault.
Production has been moved to a new plant in Sanand, in northwestern Gujarat state and normal assembly is expected to be resumed within the next two months.
Analysts estimate that Tata will sell between 80,000 to 85,000 cars by the end of the fiscal year to March 2011 – below initial company predictions.
