Tata Motors shuts Nano plant in Gujarat for re-tooling

Tata Motors has shut its Nano manufacturing facility in Sanand, Gujarat, for up to 40 days as inventories of the small car piled up and the company embarked on a retooling programme to manufacture a new version of the Nano for the festive season.

Tata Motors is also planning to undertake manufacture of hatchbacks and compact sedans based on a new platform known as Kite. The new models, which will compete with the Maruti Celerio, are slated to be launched in 2015.

Despite its best efforts to market the Nano, Tata Motor has been operating the Sanand plant for two - three days a week over the last six months periodically on account of low market demand.

The company has been producing 2,000 to 2,400 cars every month for the last six months, but a zero schedule for June was a surprise," a person aware of the development said.

"As with all our plants, the Sanand facility is closed as per annual planning for routine upgrades, maintenance and adding of tooling flexibility for new variants. The period for this kind of maintenance work may vary and range from 3-6 weeks," the Tata Motors spokesperson said.

Experts say a shut down for as much as 35-40 days shows lack of demand as in modern automobile plants maintenance should not take that long for even retooling for a new car.

Described as the people's car, the demand for Nano has languished. The production in FY-14 was the lowest at 21,538 units, which is not even 10 per cent of Sanand's annual capacity of 2, 50,000 units.

The company has inventory of at least 8,000 to 10,000 units with even some of the cars made in 2013 not managing to find buyers yet.

The spokesperson said as per policy the company cannot share the specific inventory numbers of a particular brand, but added that they have seen a significant cut in inventory over the last three to six months.

He said the CNG version of Nano or the Nano with power steering did infuse some interest in the brand, with monthly retail sales improving from 1000-1500 to the current level of 2,000 to 2,500 units.

"We have seen a good pick up of the new Nano Twist and we are beginning to see stronger retail sales with its repositioning as the smart city car,". The company says.

The company is planning to introduce an automatic variant and a 1.05 litre Nano as part of an overhaul. The Sanand plant was set up with an investment of Rs2,000 crore.