Sunday, March 22, 2009

Nano buyers have to pay entire price on booking

A Nano won't come cheap and easy for the masses waiting for their first car. In an effort to limit the demand for the much-hyped people's car, Tata Motors would insist on 100% (Rs 1 lakh) down payment for the Nano on booking. This, according to dealers, is an attempt to restrict the bookings since the company is severely constrained on the supply side of Nano. Typically, a customer pays 20%-30% of the on-road price of a car as down payment at the time of booking.
The Nano will be sold through a lottery system and the booking forms would be available over the week with all its dealers, select State Bank of India (SBI) branches and all Tata group retail ventures, including Croma, Westside, Trent and Star Bazaar. The form is expected to cost around Rs 200-300.
The booking will be open for 14 days, after that the draw of lots will be conducted. The first car would be delivered to the lucky customer in two-and-a-half months, said a dealer.
Ajit Joshi, chief executive officer and managing director, Croma, told FE, "Booking forms for the Nano car would be made available from Monday across all Croma stores in India. But we have certain restrictions on revealing information about the prices at which the booking forms would be made available. Croma stores have received many enquiries for forms before the formal launch of the car."
Banks are happy with the higher down payment for the Nano, as that allays their fears about potential credit risks that a high demand and long waiting period for the car poses. "Essentially, banks will be interested in financing up to 70% of the car's basic cost'', said another dealer.
A senior official of the State Bank of India (SBI) told FE that bank is offering auto loans at a concessional interest rate for a limited period. "We are already having a special lending scheme for auto loans, under which we are charging an interest rate of 10% from any borrower approaching us until May 31, 2009. Once the deadline was over, we will be charging a regular interest rate of 11.5-12% depending upon the loan amount and the tenure of repayment for any customers approaching us."
Westside officials confirmed, on condition of anonymity, that "All Westside stores in India will start selling car booking forms for the Nano car from the fourth week of March.
Tata Motors is in the process of setting up the Nano's motherplant at Sanand in Gujarat. Till that plant comes on stream, the company is relying on the make-shift plant facility at its existing plants in Pune and Pantnagar to roll out the Nano. The two plants would produce around 40,000-50,000 Nano cars this year.
Tata Motors has been badly affected by the economic slowdown and is reportedly hard-pressed for cash to pay the $2-billion debt loan it took for the Jaguar and Land Rover buy last year. The company declared a loss of Rs 263 crore for the December quarter.

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