Tatas may provide Nano buyers finance

In an effort to make the world's cheapest car more affordable, Tata Motors is exploring the possibility of providing loans for the Nano either through Tata Motors Finance (TMFL), a wholly owned subsidiary, or existing financing channels.

This goes against the industry practice where hire-purchase (financed) deals are signed by dealers and not by manufacturers.

"Under its distribution strategy for the small car, Tata Motors has initiated discussions with leading vehicle loan providers in the country. This is in line with the existing financing options with a down payment and the rest in installments," sources close to the development said.

The group's priority is to provide financial support through TMFL. The company is also talking to ICICI Bank, State Bank of India and HDFC Bank. The Tatas are looking at forging an exclusive partnership for the Nano.

However, a Tata Motors spokesperson said: "Tata Motors does not want to share any information on financing of Nano at this stage."

The profits from financing of the car will be lower than from normal cars. Industry sources predict huge demand for the Nano.

According to an analyst, this would be the icing on the cake for Nano. For example, the popularity of two-wheelers in the country is due to the easy financing options available.

"As the Nano is being targeted for the masses, the Tatas will offer financing options which will make them more affordable," he said.

Launched earlier this month, Nano is the world's cheapest car with a price tag of Rs 1 lakh ex-showroom. On road, it is expected to sell at Rs 25 to 30 thousand more.

Analysts expects the Tatas to sell 60,000-65,000 units of the Nano in the first year of launch, and 150,000-180,000 in the subsequent year and around 210,000 units in the third year of the roll out.