Selling Nano as cheapest car was a mistake, says Tata

Tata defends decision to acquire Corus for $12 bn

As the sales of Tata Motors small car Nano has failed to pick up, Ratan Tata, chairman emeritus of the Tata group, has said selling Nano as the 'cheapest car' was a mistake.

"It was termed as a cheapest car by the public and, I am sorry to say, by ourselves, not by me, but the company when it was marketing it. I think that is unfortunate," Tata told CNBC.

Tata Motors is now looking at the option to launch Nano in a new avatar in another country like Indonesia and bring it back to India for a fresh start with a new image.

"May be it (Nano) gets launched in another country like Indonesia, where it doesn't have the stigma and the new image comes back to India. Or maybe as a changed product that gets marketed in Europe. There's a lot of interest in Nano outside India," Tata said.

Tata Motors is working on re-launching the Nano, by incorporating certain changes. From its peak sales of 10,000 Nanos in April 2012, Nano now sells less than 2,500 units a month in the country.  Tata Motors tried to relaunch its marketing campaign targeting the youth and with added features but it has not cut ice with the next generation. Customers have shunned Nano for its cheap car tag and for its spartan interiors.

In a separate interview to global bank, Credit Suisse, Karl Slym, MD of Tata Motors said the company is taking several cost savings measures which would save upto Rs 3,000 crore a year. Slym said  Tata Motors is cutting down the number of suppliers from 1,400 to 400 and is going for a major platform consolidation by 2016. All the 12 new models will be made from the same platform. These will lead to cost savings of Rs 3,000 crore per annum within three years, Slym said.

By 2020, Tata Motors may have up to 12 new vehicles including cars and SUVs (sports utility vehicle) on the new platform, while a new SUV sharing same platform with JLR will also be launched. Slym also said the car industry revival will happen faster than the commercial vehicles industry.

On its struggling Tata Corus, Tata said the company needs to look beyond Europe and US and instead focus on emerging markets to revive its fortune.

Tata admitted that $12-billion deal to acquire the Anglo-Dutch steel maker Corus was 'expensive” but hoped that the company will turn around soon. "It was expensive...We were only a five million tonne company in India and this gave us about 20 million tonne. So it was a high price but not a price that would do what the economic situation did to us, which is unfortunate."

"I think there are many things that Corus probably needs to do. It has been a traditional Europe-facing and US-facing company. While the US has been coming out of recession, Europe is still flat or down and I think the company needs to look at different markets, including the emerging markets, as a market for its products," Tata said.

On speculation by global brokerages that Tata Steel should sell all or part of the company, Tata declined to comment. "I have been away from that situation for nine months. I wouldn't like to comment". Corus is losing a billion a year due to a slowdown in the European markets.