Tata Motors has finally admitted that its entry level small car Nano "has been a loss-making product," though the company has not given any visibility about its future.
In a filing with the Bombay Stock Exchange, the company said that considering the attention and the excitement the Nano created, project investments were set up to churn out 250,000 units per annum.
The company further added that unfortunately and due to combination of several factors which included project delays because of change of location of the factory and the perception of being a low-priced car, the volumes initially anticipated did not materialise.
Also, the utilisation of the capacities were significantly lower than expected. With the highly price-sensitive market along with low volumes, the Tata Nano has been a loss making product.
Reports suggests that the Tata Nano was constantly losing money even peaking at Rs 1,000 crore. Emotional reasons kept the project going and the current scenario might hold back future investment in the Nano project.
Tata Motors in its statement said that major part of the investments in the Nano factory in Gujarat can be utilized for other products.
Tata Motors manufactures its current best-selling Tiago in the same factory. This factory could be utilised for any of the future products from the company.
Tata Nano was launched back in 2008 with the price tag of Rs 1 lakh which was increased with time.
The car was to produced at the Singur facility in West Bengal; however, due to protest from farmers, the factory was eventually shut and Tata Motors moved the project to the Gujarat facility.
Tata Nano is a two cylinder 624cc petrol engine paired to a 4-speed manual gearbox. The mill produces 37.5bhp with a peak torque of 51Nm.