A few days ago, we reported how Tata Motors plans to start production of a new small car at its Sanand plant in Gujarat. Sanand plant was originally started for mass production of Tata’s small car Nano. But lack of demand for the Nano left majority of the plant’s production capacity unused.
In the latest update, Tata Motors has shut its manufacturing plant in Sanand between 35 to 40 days on account of low demand and inventory pile-up, accompanied by ongoing retooling activity to manufacture a new version of the Nano for the festive season.
The Sanand plant is also receiving certain tweaks to manufacture hatchback and compact sedans based on a platform known as Kite.
Due to lacklustre demand of the Nano, Tata Motor has been operating the Sanand plant for as low as two-three days a week over the last six months. “The company has had to take some tough measures. This includes keeping the plant shut instead of pushing inventory and incurring further loss. The company has been producing 2000 to 2400 cars every month for the last six months, but a zero schedule for June was a surprise,” a person aware of the development said.
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“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 three-six weeks,” the Tata Motors spokesperson said.
The FY14 production of Nano was at it lowest at 21,538 units. This number not even 10% 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.
Hopes of the company hang around the CNG version of Nano or the Nano with power steering which infused some interest in the brand, with monthly retail sales improving from 1000-1500 to the current level of 2,000 to 2,500 units. The company for its part says, “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”.
Built to produce one Nano a minute, the Sanand plant was set up with an investment of Rs 2,000 crore. However, the lacklustre demand and piling up inventory forced Tata Motors’ to stop the production line. The company hopes to revive and utilise the Sanand plant to manufacture new hatchback and sedans based on Kite platform. The new generation Nano would also add to the utilisation of the plant. However, as of now, thing are not looking that good.
Source: ET Auto