Nano rakes in big bucks for Tata Motors; $500Mn earned just from bookings

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David David,

Bookings for the world’s cheapest car Tata Nano, failed to live up to hype. Tata recorded 2.03 Lakh (203,000) bookings till date, which equates to one-third of the total number of forms issued and is way less than the company’s expectation of half a million bookings. Nevertheless, Tata Motors has managed to get richer by Rs.2500 Crores ($0.5 Billion) in a very short span of time.

With these bookings and especially the money, the company hopes to refinance a few debts and keep the Nano production line engaged till mid 2011. Tata’s Pantnagar plant in UP will produce around 50,000 units/yr while the new plant at Sanand in Gujarat, will boast a production capacity of 2.5 lakh units/yr, when it goes online in 2010.

Unusual pattern in bookings

According to Tata Motors, the top-end variant LX has been the customers’ favorite. The base version accounted for 20% of the bookings, the mid-level CX variant at 30% while the remaining 50% was swept by the top-end LX variant.

Due to this pattern, Tata is considering to manufacture greater numbers of the top-end LX variant, whose ex-showroom price is above Rs. 170,000. As of now, the company is manufacturing all three variants in equal numbers.

Prospective owners to be selected by lot

100,000 persons would be chosen from among the applicants through a computerised random selection procedure, and the announcement of their names will be made by June 2009. Deliveries will start in July 2009 and is expected to be completed in the last quarter of 2010.

Those who do not make it to the final 100,000 will be left only with two options. They can either cancel their order, or leave the cash advance they paid with the company to earn an 8.5% interest till they have the car delivered.

Fact: The 203,000 bookings does not make Nano the best-selling car in the country yet. Maruti Alto, which is priced almost twice as much as the Nano, sells an average of 240,000 units each year.

Press Release

The Tata Nano has drawn over 2.03 lakh fully paid bookings amounting to nearly Rs2,500 crore, in an encouraging response to the car launched on March 23, 2009.

The Tata Nano website recorded an unprecedented 3 crore (30 million) hits from the date of launch of the car to the closure of the booking period (April 25, 2009), nearly 1 million hits a day. About 14 lakh people walked into Tata Motors’ showrooms, Croma and Westside stores across the country to catch a glimpse of the car. A total of 6.10 lakh forms were purchased from the booking centres. Seventy per cent of the 2.03 lakh bookings received were financed, while 30 per cent of the applicants booked in cash by paying fully. About 4,000 cash bookings were made online through www.tatanano.com, a first for the auto industry in India. Among the three variants of the car, 20 per cent bookings are for the Nano Standard, 30 per cent for the Nano CX and the remaining 50 per cent for the top-end Nano LX.

As announced on March 23, 2009, the first 100,000 allottees from among the applicants will be chosen through a computerised random selection procedure, and the announcement will be made within 60 days of closure of the booking. Deliveries will start in July 2009, and are expected to be completed in the last quarter of 2010, while all efforts would be made to ramp up production and deliver earlier.

Simultaneously along with the announcement of the first 1 lakh successful allottees, Tata Motors will also announce the allotment of those booking applicants who have expressed their interest in retaining their bookings with the company even if they do not form part of the first 1 lakh allottees. The retainees will earn an interest on their booking amount, effective from that date. The booking amounts of unsuccessful applicants who have not chosen to retain their booking amounts will be refunded at the same time.

Tata Motors places on record its gratitude to the people of India for according such a warm welcome to the Tata Nano, and to all its preferred financiers, dealers and partner companies in making the Tata Nano far more accessible.

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