Friday, May 29, 2015

GenX Nano for 'trendy customer', but analysts sceptical

India's automobile major on Tuesday launched the GenX Nano, a new technologically-advanced hatchback aimed at the "trendy, youthful, bold and stylish customer". Some analysts, however, expressed their doubts about the new entry-level hatchback.
Stressing that the Nano -- originally conceived as a Rs.1 lakh car -- has put on the world motoring map by demonstrating innovation and frugal engineering, the company's president for passenger vehicles Mayank Pareek said: "It continues to remain an important brand in our passenger vehicle portfolio and we have been constantly evolving the product."
The launch of the GenX Nano is very crucial for the automobile giant, with the Nano sales having dipped over the past three fiscals.
The car has a starting price of Rs.1.99 lakh, and the company plans to sell it across 450 outlets throughout India.
The company said the compact car was aimed at the "trendy, youthful, bold and stylish customer".
The successor to the Nano brand comes with a starting ex-showroom Delhi price of Rs.1.99 lakh for the base model, while three other models are priced at Rs.2.49 lakh, Rs.2.69 lakh and Rs.2.89 lakh.
Pareek said the new car was smart, stylish, efficient and a practical city car which has strong potential in the compact hatch segment.
A section of analysts, however, expressed doubts about the new entry level hatchback.
P. Karthikeyan, research analyst for Cholamandalam Investment and Finance Company Ltd., told IANS in Chennai that the new Nano may log in some numbers during the initial period.
"But in the long run, whether it would succeed is a big question. Nano is generally known as a Rs.1 lakh car and it was launched at that price with much fanfare. Now if the same brand is priced at a minimum price of around Rs.2 lakh, then people may not like to associate with that car that is seen as the Rs.1 lakh car. It is very difficult to erase the Rs.1 lakh brand," Karthikeyan said.
Stating that the Nano was rather a marketing failure than a product failure, Brand Comm founder and CEO Ramanujam Sridhar told IANS: "Car in India is considered a status symbol and the Nano was positioned as people's car. This positioning killed the product at the marketplace even before it was launched."
"It is doubtful if people would buy the new model priced between Rs.1.99 lakh and Rs.2.89 lakh given the brand image that Nano signifies Rs.1 lakh car," he said.
Tata Motors said it thought of the idea of the GenX Nano around two years ago.
Interestingly, the sales of Nano fell by more than 60 percent in 2012-13 - the same time when this idea was projected.
Conceived by the company's then chairman Ratan Tata, the small car was first unveiled at the auto expo in January 2008.
Tata wanted to set up the "people's car" Nano's factory in the rural hamlet of Singur in West Bengal's Hooghly district, but had to abandon the plant in October 2008 following massive protests by farmers led by the then opposition Trinamool Congress against what the party called "forcible land acquisition" by the Left Front government.
Nano got a home subsequently in Sanand of Gujarat, following the personal initiative of then chief minister Narendra Modi.
In April 2009, the car received a historic pre-booking order of 206,703 units.
In 2011, the car faced starter motor issues, which resulted in recall of 14,000 units.
From 2010 to 2012, the company sold 144,959 units of the budget car, with sales peaking during 2011-12 at 74,527 units after which it has steadily declined.
Losing unit sales by 27.7 percent at 53,848 units during 2012-13, the company came up with easy EMI and credit card schemes in March 2013 to boost the dampened market sentiment. It also tried to reposition the car as a smart-city car and introduced power steering in it, but it proved not to be enough.
During 2013-14, the car's sales fell by 60.8 percent at just 21,129 units and the following year, sales went further south.
By that time, Tata Motors realised it needed to come up with something new -- to appeal to the younger generation and the idea to empower the Nano with new technologies was perceived.
As for the fiscal year 2014-15, Nano unit sales accounted for 16,901 units - a drop by 20 percent.
The company said its passenger vehicles business has witnessed a growth in the last four months and in April 2015 has recorded the highest growth at 37 percent and has pinned its hopes high on the new GenX Nano.
"With the addition of the GenX Nano... the company is all geared to expand its sales network from around 450 outlets to 1,500 outlets in the next five years. This year, the company will add 200 outlets, across the country," it said.

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