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BW Businessworld

‘There’s No Nano II Yet’

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Carl-Peter Forster met with BW's Rajeev Dubey at his Bombay House office. Excerpts:

What was the management going through when the volumes hit 509 in November 2010?
The Nano is probably the most watched observed and documented car launch in recent history. One of the symptoms of local volume reporting is that it reports wholesale and not retail. The 509 in November is a classic example where we did not sell 509. We sold a couple of thousand. But it was a stock correction. So that number was hugely publicised.

It wasn't the company's plan to launch Nano to that type of (high) expectation. We had a volume constraint for a year and a half. If you willingly or unwillingly create a lot of demand and there isn't supply, then there is an element of disappointment or disillusionment.

Then came the production ramp-up in Sanand. We now have to create a sales system — current dealers selling Nano and new dealers. If you want to sell 10,000 a month, you need 2,000 sales people. The problem is, you can't build infrastructure beforehand. Secondly, we have to reach out to rural areas. So we have now created a new dealer format — Exclusive Nano Dealer. We're creating a format with a very small showroom with a small workshop. The third important element is the tie-up with banks. Initially, we were solely with Tata Motor Finance. Now, banks are interested.
What about Nano II? It's already a three-year-old product...
There is no Nano II yet. Certain additions to the product offering need to be made. Yes, we will do a diesel engine. We want to further improve the fuel economy. You might want to do a bit of an optical refreshening. You might add one or the other features. It's not yet the time to talk about a Nano II. It is time to talk about going international.

When do you hope to ramp up to the volume of break even?
We have an ambitious plan to bring all dealers on board. Step-by-step, we'll be able to sell the required volume.

How do you react to the competition now coming in?
We'll have a headstart in terms of the sales infrastructure as well as products.

You being a diesel company, one would have expected that the diesel variant would come faster...
Sure, but the diesel variant is quite expensive. So, we would clearly need to establish the Nano first.

Do you expect a hockey stick effect in Nano volumes?
No. Hockey stick is not likely. I think I would see more of a gradual growth.

At what volume will a Nano dealership be viable?
For the smallest dealership, six to eight a month.

(This story was published in Businessworld Issue Dated 01-08-2011)