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Tata Motors Plans New X0 Compact Car
While Tata Motors' plan to get into the compact car segment might sound like a regular expansion strategy, in reality the plan is driven more by the need to utilize production capability of its Sanand plant in Gujarat. It is in Sanand that Tata Motors manufacturers the Nano.
The Nano has turned out to be a mega burden for Tata Motors since the car has been hardly rolling out of its Sanand plant. The failure of Nano is best assessed by comparing its latest sales figure with the numbers from one year past. In April 2012, when the Nano was new, 8028 units were sold. Fast forward one year and only 948 units went out of showrooms, in April 2013, a massive drop of 88 percent.
Tata's Sanand plant has a production capacity of 2.5 lakh units, which is now been underutilized by as much as 80 to 85 percent. This results in an increase of per capita cost of production. So, not only are the number of Nanos being sold low, but the margin of profit on each model is extremely less. Perhaps it is even being sold at lower than production cost.
The rumored X0 compact car is planned fill the void left by the Nano by manufacturing it at the Sanand plant to utilize the plant's full capacity. Tata Motors X0 will also enable the company to compete against Maruti Suzuki Alto, Hyundai Eon and i10.
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