Nano will dent used car, two-wheeler markets: Experts

March 23rd, 2009 - 9:05 pm ICT by IANS  

Mumbai, March 23 (IANS) The launch of Nano, the world’s cheapest car from Tata Motors, has created a new segment in the auto industry that will affect the used car and two-wheeler markets “significantly”, experts said.
Tata Motors Monday launched the Nano commercially, more than a year after it unveiled the Rs.100,000 car at an auto expo in Delhi.

The car will be available for booking between April 9-25 with delivery starting in July at a booking price of Rs.2,999.

Experts feel the used car market and the two-wheeler business will be subject to attrition, with the Nano bridging the gap for first-time buyers.

“It’s likely to affect the used car business by 10-12 percent with immediate effect. It might also push down the price by an equal percentage for second hand vehicles,” auto analyst Murad Ali Baid told IANS.

Abdul Majeed, principal automobile consultant at PricewaterhouseCoopers said the impact of Nano on the used car market will be “significant”.

“The car has created a new segment, which will significantly affect the second hand car market, while the two-wheeler market will also suffer,” he said.

Tata Motors chairman Ratan Tata has declared on several occasions that he first thought of introducing an affordable car when he saw a family of four travelling on a two-wheeler.

“We had never conceived the Nano as the cheapest car but as a vehicle to enable Indian families own an affordable, all-weather mode of transportation,” Tata said at Monday’s press briefing during the vehicle launch.

However, even after Monday’s “interim launch”, many consumers may still have to wait to own the car.

Tata will manufacture about 60,000-70,000 vehicles in the first phase until its new facility in Sanand in Gujarat becomes operational by the year-end, which will take the number to around 500,000.

“We are aware that the demand is most likely to outstrip supply in the near term, because this is an interim launch, until the Sanand facility becomes fully operational,” Tata said.

He admitted that a long waiting period could dissuade prospective buyers.

Majeed shared the same view: “The biggest challenge for Tata will be to make higher numbers available as soon as possible.”

Arguing that the Gujarat facility would take some time to come up, Majeed said: “The small numbers being rolled out of Tata’s Pantnagar plant (in Uttarakhand) will not suffice.”

Dilip Chenoy, president of the Society of Indian Automobile Manufacturers (SIAM), however, said since the number of cars immediately available in the market was limited, it would not affect the used car business and two-wheeler market.

“The car has created a new segment in itself. But the initial numbers are too little to have any impact on any other segment,” he said.

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