Tata Motors set to stop making the Nano

A decade after Tata Motors first showcased the Nano at the 9th Auto Expo in January 2008, the company is set to officially announce plans to discontinue its small car.

Sales of the Nano, which was dubbed the 'world's cheapest car', have dipped sharply in the past year. Tata Motors sold just 65 units of the model in April-June 2018 – down 92 percent from the 872 units sold in the same period of the previous year. In June 2018, Tata sold 3 units and produced one single unit of the Nano. However in July 2018, 50 units were produced at the Sanand plant in Gujarat.

With no signs of sales picking up, the high costs involved in upgrading the Nano to meet the upcoming crash test norms simply don’t stack up. India’s latest crash test norms came into effect on October 1, 2017 for new cars and will widen in scope come October 1, 2019 to apply to all cars on sale in the country.

Though the official date for end of production of the Nano has not been announced, it is likely that the company will not wait until the new safety norms kick in. The carmaker will most likely discontinue the model by the end of FY2018-19.

Any additional investment in the Nano will further increase the price of the model, which is already saddled with the baggage of being known as ‘the Rs 1 lakh car’. Company insiders say that around Rs 400 crore was spent in developing the next-generation Nano (codename: Pelican). The model was designed to meet the latest norms but the project has since then been abandoned.

The move to discontinue the Nano is also in line with Tata Motor's two-platform strategy for its future models. Both the platforms – namely ALFA and OMEGA – will be modular and are aimed to help the carmaker achieve greater economies of scale.

India Auto Inc sees shrinking sales of entry level cars
Tata Motors’ decision to pull the plug on the Nano comes at a time when the entry-level segment as a whole in India is shrinking as more and more first-time buyers are jumping to higher segments.

Renault India's once-hugely popular Kwid small car has lost its sheen and demand for the Datsun Redigo has stymied too. India's venerable top-selling car – the Maruti Alto – lost its top position to the Dzire in June 2018.  In July 2018, Maruti’s entry-level Alto and the Wagon R mass-market offerings sales fell by 10.9 percent, their combined sales standing at 37,710 units (July 2017: 42,310). In the April-June 2018 period, cumulative sales of the Nano, Hyundai Eon, Kwid, Redigo and the Alto totaled 96,923 units – down 6 percent, year-on-year.