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Despite dipping sales, Tata Motors defends strategy for Nano car

Nano sales declined by more than three-fifths to 4,459 cars in the six months of the current financial year

Tata Nano car
Tata Nano car
Reuters MUMBAI
Last Updated : Nov 05 2016 | 3:11 PM IST
Tata Motors, part of India's Tata group, defended its strategy for producing the $1,500 Nano but shied away from commenting on the loss-making car's future, after the conglomerate's ousted chairman said there were emotional reasons for not shutting down production.

Tata Motors' issued the statement to the stock exchange late Friday after an internal letter by ousted chairman Cyrus Mistry said the cost of Nano's production was always higher than its one lakh rupees ($1,497.33) price tag and the project needed to be shut down if the company wanted to remain profitable.

Mistry was sacked in a boardroom coup last week with group patriarch Ratan Tata taking over the reins as interim chair of Tata Sons. A bitter public feud has since erupted between the two sides, raising prospects of a legal battle.

The Nano's concept received global interest for its affordable pricing, but a change in its manufacturing location and the perception of a cheap car hurt production and sales, Tata Motors said in the statement.

Mistry's leaked letter, addressed to the Tata Sons directors on October 25, said emotional reasons were keeping Tata Motors away from shutting down the Nano's production.

Nano sales declined by more than three-fifths to 4,459 cars in the six months of the current financial year that began on April, 2016.

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The car maker had written off some costs associated with the Nano, it said.

Tata Motors also said investments in the Nano factory could be used for making other products and that the company would focus on "growing anattractive segments of the passenger vehicle market."

The company denied Mistry's accusation of aggressive accounting for product development expenses and said it followed standard norms which present a fair and true picture of its financial health.

Tata Sons on Friday announced a new management team for the $100 billion steel-to-software group under interim chairman Ratan Tata.

While Mistry has been removed as chairman of Tata Sons, he is still chairman of some of the key listed group companies such as Indian Hotels Co, Tata Motors, Tata Consultancy Services Ltd and Tata Steel.

($1 = 66.7855 Indian rupees)

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First Published: Nov 05 2016 | 12:44 PM IST

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