Why Nano is a hot favourite in rural markets

Ratan Tata's dream of making affordable personal transportation available to millions seems to be finally taking off, with the company reporting increased sales for small car Nano in rural markets, primarily owing to an expansive distribution and financing network for customers.

The company expects first-time buyers to account for over 80 per cent of the sales of the small car in the coming months.

"During the first round, over 80 per cent of the bookings were registered from buyers who already owned a vehicle, while the remaining 20 per cent were from first-time buyers.

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"The proportion is now shifting.

"Last month, over 50 per cent of our sales were reported from first-time buyers. We are expecting the numbers to increase by another 30 per cent over the next few months. Sales are also on a rise in rural markets", said R Ramakrishnan, vice-president, (commercial, passenger car business unit), Tata Motors.

Tata Motors sold 8,707 Nano units in March -- an increase of 85 per cent, compared to March, 2010.

Sales of the small car had hit an all-time low at 509 units in November 2010 following instances of the car catching fire.

To boost consumer confidence, Tata Motors had announced various schemes, including offering a free four-year/60,000-km extended warranty and a comprehensive maintenance contract for new buyers at Rs 99 a month.

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Tata Motors Finance also promised up to 90 per cent finance for the Nano at low rates. Volumes for the compact car have picked up since then.

In December 5,784 units were sold, in January 6,703, and February recorded sales of 8,262 units.

"We are moving in the direction we had initially targeted. Over one million two-wheelers are sold in the country every month. We expect bike buyers to account for a rise in Nano sales," Ramakrishnan said.

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The company, on an average, received over 100,000 enquiries for the car every month across the country.

Currently, Tata Motors produces 10,000-12,000 units of the Nano in two shifts at the company's plant in Sanand, Gujarat.

"Nano sales have been very good. Within a few months, we would be running at the full capacity of 20,000 units at Sanand. Beyond that, we would add fresh capacity at Sanand or at Pantnagar", Ramakrishnan said.

The Sanand facility has a capacity to manufacture 25 million units annually, which can subsequently be increased to 50 million units per year.