Carole Nash Classic Insurance Specialists

India Watch : Tata scurries to produce Nanos on temporary lines

Mehul Srivastava, Automotive News Europe, 15th December, 2008

NEW DELHI — Tata Motors is racing to produce several thousand units of the inexpensive Nano in the next few months, say three suppliers and a Tata operations executive.

Because of plant-construction problems, the cars are being built on temporary lines at Tata plants — a move that will increase costs but avoid a long delay in the Nano introduction. The Nano, powered by a two-cylinder engine, has gained global interest because Tata expects to sell it to dealers for about $2,500.

Tata was scheduled to start production at a plant in Singur, on India’s east coast, in the fourth quarter and build 100,000 in the first 12 months. But it was forced to relocate its $350 million investment in production lines and equipment from Singur after nearly 45,000 protesters ringed the site in August. Farmers and others protested confiscation of land for the plant.

The controversy resulted in Tata Motors missing its launch goal. “It has become a matter of priority for there to be at least some Nanos available for sale as soon as possible,” said the operations executive, who asked not to be named because he was revealing information he was not authorized to share. “For those first few thousand vehicles, it’s very difficult to keep prices down, because the production lines will be temporary.”

Suppliers say Tata is adding production lines to plants in Pantnagar, where it normally builds light commercial vehicles, and in Pune, an automobile production hub.

Those plants may produce a combined total of about 5,000 vehicles a month, said another supplier. He based his estimate on the number of parts his New Delhi company has been asked to deliver.

The added costs of transporting parts all around the country and creating temporary production lines might result in lowered profits or even losses on the margins of the car. The original plan called for suppliers set up within 0.62 miles of the production site to keep transport costs down.

Meanwhile, Tata has taken possession of land in Sanand, in Gujarat state, for a new permanent factory for the Nano. But “that plant is far from ready,” said a supplier, who declined to be named.

Tata did not confirm the production plans at the temporary sites. The company said: “While awaiting the Sanand plant’s completion, Tata Motors will explore the possibility of manufacturing the Nano at its existing facilities at Pune and Pantnagar, and launch the car in the January-March quarter.” 

[Source: Automotive News Europe]

 

 

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