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Rediff.com  » Business » Nano may fetch resale premium of Rs 30,000

Nano may fetch resale premium of Rs 30,000

March 23, 2009 08:32 IST

With the Nano, the world's cheapest car, ready for launch on Monday, dealers expect early-bird owners to command a hefty premium of Rs 30,000 because of the initial shortage in supply.

Tata Motors dealers say the company would have to supply between 250,000 and 500,000 cars to meet the initial demand, assuming 0.5 to 1 per cent of the over 50 million people who sent enquiries to the various official websites book the car.

Supply, they said, would be between 40,000 and 50,000 cars, with 100,000 being the most optimistic estimate. This would mean customers may have to wait for up to two years to get delivery of the car if all the bookings are accepted.

The premium on the Nano is limited by the fact that there are cheap, small cars available like the Maruti 800, which has an ex-showroom price of around Rs 1.9 lakh in Mumbai and about Rs 2.15 lakh on the road. In comparison, the on-road price of the Nano would be Rs 1.2 lakh. 

The initial demand-supply mismatch is principally because the Gujarat mother plant, which is expected to come on steam by October, has an initial annual capacity of 250,000 cars, rising to 500,000 later. The plant is already delayed, having been relocated to Gujarat following political problems with land acquisition in West Bengal, where it was initially to be located. Till the Gujarat plant goes on steam, the car will be assembled at other Tata Motors locations in Pune and Pantnagar (Uttarakhand).

"The scene will be a bit like the Maruti 800 days. Those who are lucky enough to be allotted cars this year can resell it immediately at a premium of Rs 30,000 due to the anticipated shortage," an executive of a Delhi-based Tata Motors dealer said.

Tata Motors is not ready to discuss details, but dealers said customers would have to pay 70 per cent of the showroom price of the car (over Rs 70,000 for the entry- level model) upfront as the booking fee, which would be fully financed by the State Bank of India with which Tata Motors has tied up.

Customers have to book the car in any of the SBI-stipulated banks and fill the booking documents. Dealers will only deliver the car and have no role to play in raising finance for buyers.

The winners will be chosen though a random computer-generated sample. Although the cars will arrive at the dealers registered in the name of the buyer, there is nothing to stop customers re-selling it.

Surajeet Das Gupta and Swaraj Baggonkar in New Delhi, Mumbai
Source: