What started as a promise to be 'the people's car', Tata Motors' 'Nano' is finding it tough to get going with customers turning their backs to the model and sales for which have been dwindling.
Launched in 2009, it was a dream project for Ratan Tata to build a car for the masses.
As per sources, Cyrus Mistry, Chairman of Tata Sons, has already given an ultimatum to Tata Motors in this regard.
Mistry has warned that he may be forced to shut down the project if sales do not revive in the next two years, sources said.
Over the years, Tata Nano has seen poor demand and a resultant pile-up in inventory that is evident at the plant, which is filled with unsold cars. In FY14, only 21,129 units of the Nano were sold.
Meanwhile, Tata Motors has commented, "Nano remains an important part of our product portfolio. We do not have any comments on future product plans".
The production of the car in FY14 was the lowest at 21,538 units which is not even 10 percent of Sanand's annual capacity of 2, 50,000 units.
The plant is currently operating at just 5-10 percent of its annual capacity. The company has been producing 2000 to 2400 cars every month.
The company has inventory of at least 8,000 to 10,000 units including those cars that were made in 2013 but yet to be sold.
The automaker had invested around Rs 4,000 crore on this product, which is produced in Sanand, Gujarat.
However, Tata Motors is now gearing up to revive the country’s cheapest car Nano, which is still on bumpy roads.
The Nano, powered by a 624cc petrol engine, was launched in 2009 at an ex-factory price of Rs 1 lakh, which is touted to be the cheapest for any car in the world.
In September 2008, during the previous Left Front regime, the Tatas left Singur in West Bengal and set up Tata Nano car plant at Sanand in Gujarat following an agitation by the then opposition Trinamool Congress leader Mamata Banerjee over 'forceful' acquisition of farmers' land in the area.
A case regarding this is also pending in the Supreme Court.
Tata Group Chairman Ratan Tata had earlier admitted that Nano, nicknamed 'the people's car', could not realise its full potential as it lost momentum in the initial years due to issues like plant transfer and insufficient advertising campaign and dealership network.
Domestic sales of commercial and passenger vehicles at Tata Motors grew by 8 percent to 37,776 units in December as compared to a year ago.