The Hindu Business Line : Tata Nano ready to explore licensed manufacturing route to meet demand

Faced with the prospect of an overwhelming demand for its low-cost, ultra compact car – the Nano, Tata Motors is ready to explore opportunities for licensed manufacturing of the car.

In addition to satellite manufacturing or franchisee model that Tata Motors had spoken about in the past, the company is also considering licensing agreements with overseas manufacturers to speed up the process of launching the ultra-compact in export markets.

Speaking to a few Indian journalists here at the ongoing 78th Geneva Motor Show, on the sidelines of the unveiling function for the Tata Nano, Mr Ratan Tata said, “Every decision must be based on the demand for the car. If we cannot meet it, we will look at licensed manufacturing.”

In addition to compressing the gestation time for the launch of the Nano in overseas markets, licence manufacturing the car in important geographies will also go on to reduce costs involved in sourcing and logistics.

The Nano that was unveiled here on Tuesday was the same right-hand model that was showcased at the Auto Expo in New Delhi in January.

Redesigned model

Speaking about the plans for the launch of the Nano in markets abroad, Mr Ratan Tata said that the car will be redesigned for markets such as the US and Europe, but said that the timeline is still being worked out because its primary focus will be to meet demand in the Indian market.

He, however, mentioned that the Nano, just like in India, will be positioned as an affordable car even in overseas markets. “It will be low-cost, totally compliant with all the regulations of the land and be priced at a level that has never been offered before,” Mr Tata said.

Speaking about the Nano’s plans for the domestic market, Mr Tata said that the company was considering the idea of distributed manufacturing for the Nano, where ‘easy-to-assemble kits’ can be sold to local entrepreneurs who can then assemble and sell the car at their end in pre-defined locations.

Tata Motors is also pursuing various options in the alternative fuels and related technologies area. “We are keen on having a bigger presence in the bio-fuels area. Electric vehicles, Hybrids and Flex-fuel vehicles are also being actively considered. However, we will not be a big R&D spender in these areas, instead the company will look at sourcing components, systems and technologies on these segments from others,” Mr Tata said.

Two areas of concern that Mr Tata cited for the company included the current scenario of high interest rates and low availability of automobile financing in India and the possibility of an escalation in input costs due to a hike in prices of inputs such as steel and rubber. He said that any relief in the cost scenario, including the cut in excise duty announced in the Budget, will be a welcome measure.

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