Tata Nano readies for makeover, to get a boot

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Tata Motors is weighing a plan to redesign the Nano to add some boot space. This follows feedback from potential customers. The redesign will mean India’s cheapest car will cost a little more.

“We are working on extending the Nano in the back to create boot space to stack a suitcase or two. We are also looking at the space in the front where the wheel is stored and redesign it to create some more storage space there as well,” a senior Tata Motors official told Financial Chronicle.

However, an email sent to the company elicited this response from its spokesperson: “There is no change being done to the Tata Nano to increase boot space.”

Karl Slym, ma­naging director, said earlier this month, “We will take add­itional ch­anges to the Nano. A CNG and a diesel version will be launched and other changes will be made that recognise customer needs.”

Other Tata Motors officials said the Nano was designed for a nuclear family of two with a child or two and hence and was never envisaged to carry luggage. Still some space was created behind the rear seat and over the engine.

“Boot space is one of the key factors that constrain Nano sales. This confines the Nano to city use only,” says Vishal Srivastav, research manager of Credit Analysis & Research.

He says proper boot space may raise sales somewhat, low power of the car and the lack of a power steering option will hold back sales. If the Nano is compared with Maruti’s entry-level cars, many basic features are missing in the Nano.

“Buyers are aware of this and do not mind shelling a few thousand rupees more to buy Maruti cars,” he says. But he says that CNG and diesel variants will increase sales.

Other experts point out that the Indian market has always been sensitive to running cost of a car. Given the fuel prices, diesel and CNG are emerging as preferred options among car buyers. A diesel or CNG Tata Nano is likely to see far greater market acceptance, they say.

“In last year’s JD Power study, the Nano scored the least among sample models. Across categories, the lowest score was on storage and space (770-index point out of 1,000). Owners were not only discontented with the amount of boot space but also with the location and arrangement of storage spaces. Limited central console storage and cup holders, impact the practicality of usage. These days customer take a lot of items inside the car like multiple phones, cups and handbags, and need space to keep these items,” said Singapore-based Mohit Arora, executive director, JD Power Asia Pacific, in an email response.

“Better space availability and utility are likely to improve product satisfaction and generate a more favourable customer opinion,” he added.

“The most important thing is that the customer must perceive value for money in this segment. That only will help the company move up from selling 100,000 Nanos a year to 400,000 where they can be profitable,” said Abdul Majeed, leader of auto practice at PwC.

According to him, by providing more boot space, diesel and CNG engines, Tata Motors can reach the Nano’s potential. The company’s factory at Sanand has a capacity to produce 250,000 Nanos a year but in 2011-12 it sold fewer than 75,000.

“The Nano presents a very unique value proposition to the entry-level car buyer. The closest entry-level car is the Maruti Suzuki 800, which is around Rs 40,000 more expensive, while most other small cars are at least Rs 1 lakh more expensive than the Nano. Also, the early buyers of the Nano reported a lot of problems. In 2010, for instance, 195 problems per 100 vehicles were reported in the JD Power study. But ongoing improvements in quality saw the 2011 number drop to 144 problems per 100 vehicles,” said Arora.

Tata Motors chairman Ratan Tata in an interview with Automotive News earlier this month indicated that a redesigned no- frills Nano could hit the US market within three years. “The US is a very enticing market. We hope that the sub-$10,000 car has appeal,” he had said.

To compete in the US, however, the Nano will have to undergo redesigns to meet American standards, including power steering and traction control. This will raise its price to about $8,000 (Rs 4,28,000).

That will still make it America’s cheapest car, beating out the Mexican-made Nissan Versa that retails for $11,750 (Rs 6,28,000).

The new version of the Nano will also come with a bigger engine and “more bells and whistles,” according to the Automotive News and Associated Press. Tata Motors is reportedly redesigning the Nano for Europe as well.

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