Is Tata Motors ‘Emotional’ About The Nano Project?

The Tata Nano production is higher than its Rs 1,00,000 price tag, but the company is emotional about it. Should production stop?

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Tata Motors defended its strategy for manufacturing the Nano, but stayed away from commenting on the hatchback's future, after the company ousted chairman said there were emotional reasons for not stopping production.

Tata Motors issued a statement to the stock exchange on Friday, after an internal letter by ex-chairman Cyrus Mistry, that said the cost of manufacturing Nanos was always higher than its Rs 1,00,000 price tag and the project had to be shut down if Tata Motors wanted to remain profitable.

Tata Motors in a statement said, the Nano's concept drew global interest for its affordable pricing, but the change in manufacturing location and the thought of a cheap car hurt production and sales.

A leaked letter from Mistry addressed to the Tata Sons directors on October 25, said Tata Motors is not shutting down the Nano's production due to emotional reasons.

The sales figures of the Tata Nano has dropped drastically over the years and even the introduction of an AMT has not helped the carmaker with sales.

Tata Motors also said investments in the Nano factory could be used for making other products and that the company would focus on "growing and attractive segments of the passenger vehicle market."

While Mistry is no longer the chairman of Tata Sons, he still is chairman of some of the important listed group companies such as Indian Hotels Co, Tata Motors, Tata Consultancy Services Ltd, and Tata Steel.

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