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New Delhi - The Nano is not a flop, its creator Ratan Tata
said on Thursday, but he acknowledged that his Tata Motors failed to capitalise
on the early excitement surrounding the launch of the world’s cheapest car.
In a wide-ranging briefing with journalists Tata, who will
retire in December as head of the Tata group, India’s biggest business house,
also said the steel-to-software conglomerate had paid a price for not
participating in corruption.
Four years ago Tata Motors unveiled the Nano in what was
seen at the time to be a crowning achievement for the silver-haired Tata, but
sales have trailed far behind early expectations following a series of
setbacks.
“We never really got our act together when the 100 000 were
depleted,” he said, referring to the first batch of Nanos sold through a
lottery system when initial demand exceeded supply.
“I don’t think we were adequately ready with an advertising
campaign, a dealer network,” he said during a two-hour breakfast meeting with
journalists on the first day of the India Auto Expo - the same event where a
euphoric Tata and his Nano stole the show four years ago.
A rising price - the entry level Nano now costs 140 000
rupees ($2 657), above the 100 000 rupees initially envisioned - as well as production
delays, quality concerns following two voluntary recalls, and a stigma over the
car’s “cheap” image have all dented demand.
“We’ve never pushed it as a poor man’s car. We pushed it as
an affordable all-weather family car. Period,” said Tata, who over two
decades has built the Tata group into an $83bn conglomerate that generates
two-thirds of its revenue outside India.
While the Nano has failed to live up to expectations, Tata
Motors' $2.3bn purchase of luxury carmarker Jaguar Land Rover in 2008 has
exceeded them. CLSA recently upgraded Tata Motors to outperform on the outlook
for the two British brands.
“In sum, I don’t consider it to be a flop. I consider that
we have wasted an early opportunity,” said Tata.
Tata is launching a Nano that runs on compressed natural gas
at the car show, a company official said, but is at least a year away from
launching a diesel version, which many critics say is key to success for the
Nano in a country where petrol costs 56% more than subsidised diesel.
“I believe that we will see a resurrection of this product
as we move forward,” Tata said.
Tata said the company still wants to develop a low-cost car
for the European and US markets, but such a car will need to be upgraded to
meet safety and emissions standards and include the sorts of extras Western consumers demand.
Season of scandals
India has been racked for more than a year by a series of
corruption scandals, including over the award of 2G telecoms licences. Tata was
among the corporate titans summoned to answer questions before a parliamentary
panel, although neither he nor his group has been accused of wrongdoing.
“I think the issues have shown that we were one of the
victims of what took place and not the offenders,” Tata said.
The Tata group “will deal with corruption the same
way as they have, that is by not participating, sometimes to a great cost to
the corporation”, he said.
“The fact is that one hopes for an India... where no one is
above the law, and there’s no preferential permits or approvals or such that
are available that all aren’t considered on a similar basis,” he said.
Fallout from a series of scandals has battered India's
ruling Congress party, stalled decision-making on project approvals, and scared
off investors.
Unlike most of India's big business houses, the Tata group
is not family-owned and Ratan Tata is not on the Forbes list of billionaires.
Tata Sons holds the bulk of shares in key companies, and
philanthropic trusts endowed by the Tata family own 66% of Tata Sons, and the
group enjoys a reputation for integrity.
“We’ve never been asked to give a bribe because most of the
agencies know that would not be possible for us to do,” Tata said.
