Tata Motors to use Nano plant for new hatchback Pelican

With the Nano almost bombing in the market after Tata Motors spent a whopping Rs4,000 crore on its development and manufacture, the company now plans to use the dedicated Nano facility at Sanad in Gujarat to develop and produce a slightly bigger hatchback to take on the Maruti Suzuki Alto, India's top-selling car.

The company is India's largest automaker by revenue, but most of this comes from its trucks and tractors rather than passenger cars – barring the Indica, none of its models has really taken off in the Indian market so far.

The new car, code-named the 'Pelican', is being developed on the 'X302' platform, an upgraded version of the Nano. To be powered by two new engines - a one-litre petrol engine and an 800cc diesel engine - the car is expected to hit the road next year.

"The bigger car will be sold under a new brand. Its diesel variant, the cheapest diesel car in India, will later be exported to several other markets," company sources were reported to have said.

"Tata has given its suppliers a modest sales target of about 2,500 units a month. That is a realistic number, and good for suppliers, considering the company is trying to make a comeback in the car market," another source told Business Standard.

To gain from economies of scale, the Pelican will be manufactured at the Sanand factory alongside the Nano. The plant has an annual production capacity of 250,000 units a year or about 20,000 a month; but given the low demand it currently makes only about 1,300 Nanos a month.

The Maruti Alto, which the Pelican hopes to challenge, sells about 24,000 units a month. The sales of the Hyundai Eon, another likely rival, currently stand at about 6,500 units a month.

Tata Motors' overall domestic passenger vehicle sales, in volume terms, have declined sharply over the past few years. During the April-December period of this financial year, these fell 11 per cent on a year-on-year basis to 92,227 units.

But there have lately been some encouraging signs; in December, Tata Motors' sales rose 30 per cent over a year ago to 12,040 units, mainly on account of a good response to the newly launched Zest.

This month, the company is launching the Bolt hatchback, the first in a series of launches scheduled for the next two years. The others include the Nexon, a compact SUV; the Kite, a small car to replace the Indica, and upgrades to the Safari Storme SUV.