Tata Motors has cut production of the world’s cheapest car Nano to fifty per cent of the installed capacity due to lower demand. During the launch of new version of Tata Sumo SUV in Kolkata, R Ramakrishna, the VP of Commercial sales and marketing department, had commented on lack of 100% utilisation of their production units. The manufacturing units of the auto major has the capacity to produce 2.5 lakh units out of which only 10,000 units are rolled out at the moment. However, on a positive note he had averred that they might ramp up the production which is likely to be based on the increasing demand.
World’s cheapest car got a first upgrade this week, the new Tata Nano during this week and is pinning high hopes for the demand to see heights in near future. They intend to take the Tata Nano legacy forward by entering into the smaller cities and rural markets by having their new dealerships launched. With the low price tag being the cheapest car across the world, Tata Nano is expected to sell in the volumes of a two-wheeler. The phenomenal mileage of 25.4 kmpl offered by the car is the selling factor for the car to have enough neck-to-neck competition with the two-wheelers.
The Nano is not the only car suffering from lack of demand, and most carmakers are hit due to the slowdown in the auto industry. Sales have dropped this year due to high interest rates, rising fuel prices and double digit inflation. The majority of the manufacturers have cut their production to align inventory with demand. The production cuts are even higher on the petrol models, as there is a paradigm shift towards diesel vehicles. The production cut for few companies is also attributed to recent labour issues and unavailability of components due to Thailand floods and the Japanese tsunami.