Tata to re-position Nano as feature-packed city car

Tata Motors, facing poor sales for its ambitious mini-car Nano, plans to re-position the vehicle as a city car for the youth, with a revamp that will add features like power steering and smarter interiors and exteriors, and better fuel efficiency.

"We are now focusing on increasing the features and the perceived value of the Nano with every subsequent model launch," Cyrus Mistry, chairman of Tata Motors as well as the Tata Group, told shareholders at the annual meeting on Wednesday, which was his first as chairman after taking over from Ratan Tata this year.

The Nano was launched in 2009 amid international hype as the 'world's cheapest car'. But, the 'cheapest' tag hasn't gone down well with status-conscious Indian consumers, with reports of several of the cars going up in flames almost on delivery. In fact, two-wheeler makers like Bajaj Auto were confident from the start that the Nano would have no impact on their sales.

"We are now focusing on making it a smart city car and targeting the young customers," Mistry said.

He also said the company would launch the much-delayed gas-fuelled variant of the Nano this year.

The jellybean-shaped Nano, which sold for a little over Rs1 lakh (around $2,200) when its first edition went on the market, saw sales drop by more than 27 per cent in the financial year ended March, and Tata's former chairman Ratan Tata admitted the car had an image problem.

Tata's dedicated Nano plant at Sanad in Gujarat is currently running at less than half its capacity.

Echoing the views of Indian car makers amid an unprecedented slowdown in sales, Mistry said Tata's Indian operations were "impacted heavily by the slowdown in the domestic auto sector, high interest rates and stagnation of industrial growth in sectors such as mining and infrastructure".

While Tata passenger cars have not made a serious impact in the Indian market, it remains the country's largest maker of trucks and tractors.

Tata, which also owns Jaguar and Land Rover (JLR), reported a 23 per cent dive in net profit in the April to June quarter as higher sales for its British luxury brands failed to offset weak domestic demand.