Nano can tap into two-wheeler space: V Sumantaran

24 March 2009

Former Tata Motors executive director and now executive vice chairman, Hinduja Automotive UK, V Sumantran, says the Tata team has achieved a new benchmark in costing.

Sumantran said that the Nano can tap into a very large market including two-wheelers. He said there are over eight-million two wheelers sold in India which makes it a very large market by any standards. He said some form of the reaction from competitors was inevitable, as the car would push price points down. Competition, he added, will also provide the market with a broader range of products.

CNBC-TV18 shares with domain-b an exclusive interview with V Sumantran
 
First your sense of what are sustainable prices for the Nano's base version once the initial offer is through. What kind of a sustainable margin profile can that company work with on this product?
It has been over three years since I left Tata Motors, so I would not feel comfortable commenting on their specific financial model, even with the Nano. But I can say that the team has achieved something that a lot in the industry globally thought was almost impossible.

They have truly, with the architecture and the way it has been executed, achieved a new benchmark in product costing. Given the track record of the company, I have no doubt that they will persevere and make this product both a product success and a commercial success.
 
What kind of an appetite would the Nano have in the Indian market right now, because critics have pointed out that with something priced the way it is, the big question is how much demand it generates?
From the beginning, the segment that the Nano has targeted is truly a new segment and it is in the gulf between the very large demand we see for two-wheelers.

We sell over 8 million two-wheelers in India and that is a very large market by any standards. So, even if one were to nudge into the volume base of two-wheelers, as the Nano will no doubt do, it can tap a very large population that truly can afford a two-wheelers and more today but would be hard pressed to opt for a full-fledged car at over Rs3 lakh.

I think the Nano will address a very large potential market in India.