Cheap car is an expensive treat
Egg-shaped Tata Nano, which excited the world in October 2007 does not correspond the initial declared price ($ 2500), and it naturally caused concern among potential buyers, dreaming about cheap family mini-car. With taxes and insurance costs the price of base modification Nano exceeds three thousand dollars. Adding that sum $500 an Indian can buy a second-hand car with more powerful engine and air-conditioning, which was planned for Nano only as an option.
Tata Motors, along with other automakers, has become hostage of the rapid growth of raw product prices, especially rolled steel. The situation is complicated by the fact that metal in India rises in price faster than in the industrialized world. Since January this year, when the motor show in New Delhi presented officially Tata Nano, the price of steel in India increased by 42%. Maximum simplification of kitting led to quite high proportion of raw materials in car cost.
Production costs of average American car fo metal, plastic, glass, rubber and other supplies account for around 7% today - about $ 1600, although five years ago costs accounted for $ 800. Nano projection began in 2003, and over time the weight of raw materials in the value of the Indian "people's car" increased from 13 to 23%. Tata Nano in comparison with the legendary Ford T proved untenable as more affordable American car.
Experts believe that to achieve profitability Nano output should be increased to not less than half as much as planned 250 thousands a year. The most pessimistic analysts approximate in their assessments to the 500,000 mark. As you know, trouble does not come alone, and after heavy rains Tata Motors plant urgently required additional investment. The cost of the project, launched in 2006, has twice exceeded the estimated figure, and seems that $470 million is not enough to complete the work.
Many troubles brought local farmers, revolying against land confiscation for building of the plant. People's anger has forced Tata Motors to move production of Nano to the plant in the city of Pune (Maharashtra), where they assembly the model Indica. In this case, the price of Nano, will likely be even higher, and for the reduction in price it is planned to use lighter metals and implement supply to dealers in the form of dealers in the form of tool set for subsequent assembly.
The management of the company has refrained from commenting on the transfer of production, but noted that the first batch of Nano will be ready by mid-September. For the chairman of Tata Ratana and his team this summer was extremely hard. The Second quarter Tata Motors ended with almost 30 - percent decline in profits - over the past five years these were the worst three months. Big hole in the budget ($ 2.3 billion) appeared after buying Land Rover and Jaguar, but the integration of British brands in the structure of Indian giant seems not as painful as the introducing Nano to the market.
