Tata Nano Sales Rebound From Record Low as Warranty, Financing Win Buyers

Tata Motors Ltd.’s sales of the Nano, the world’s cheapest car, rebounded in December from a record low after the automaker more than doubled warranty lengths and offered easier financing terms.

Sales rose to 5,784 from 509 in November, according to a statement from the Mumbai-based automaker today. The December tally, a 60 percent increase from a year earlier, was below the 9,000 monthly sales record achieved in July.

Tata has begun television advertisements, added more sales points in smaller towns and introduced a 99 rupee ($2)-a- month maintenance option to help revive sales of the Nano, which costs as little as 137,555 rupees in New Delhi. Sales had fallen on a month-on-month basis since July because of price increases and safety concerns following at least three fires.

“Tata Motors is now focusing on the Nano because its reputation is riding on it,” said Umesh Karne, a Mumbai-based analyst with BRICS Securities Ltd., who has a ‘buy’ rating on the stock. “Measures such as easy financing and the maintenance offer have reassured customers.”

The automaker in December lengthened warranties to four years or 60,000 kilometers (37,282 miles) and added the maintenance plan. The company opened a factory in June with the capacity to build 250,000 Nanos a year.

Tata’s total vehicle sales, including trucks and buses, rose 31 percent from a year earlier in December to 67,441, according to the statement.

Second-Best Performer

The automaker in November said it would retrofit Nano cars with additional protection in exhaust and electrical systems after the fires. Investigations concluded that the reasons for the fires were “specific” to the cars involved, the company has said.

Tata Motors rose 0.6 percent to 1,308.35 rupees in Mumbai trading yesterday. The shares gained 65 percent last year, the second-best performer in the benchmark Sensitive Index of the Bombay Stock Exchange.

The November sales tally was the lowest for the Nano since the 624-cc car went on sale in 2009. Ratan Tata, the automaker’s chairman, decided to develop the car after seeing a family riding on a scooter.

The Nano is currently sold in 12 Indian states as the company works through initial orders and ramps up production. Tata expects to begin nationwide sales by March.