Cyrus Mistry bets on urban youth to revive Tata Nano

Tata Nano will be repositioned as a "smart city car" with power steering option and several other improvements as Tata Motors bets on "customer centricity" to revive its sales in the country, chairman Cyrus Mistry said.

Addressing Tata Motors shareholders for the first time, Mistry on Wednesday said, "We are focusing on making Nano a smart city car. We will introduce a power steering option, improve interior and exterior of the car, improve fuel efficiency and target young customers." He said the company will increase the "perceived value" of the car with every subsequent model launch.

Facing some tough questions on viability of passenger vehicle business with some shareholders terming the car business as 'finished', Mistry said the company is here to stay and will continue to invest in new products, services and improving the overall buying experience.

"The road ahead for Tata Motors continues to be challenging, yet full of opportunities," he said, adding that the company may increase its capital expenditure this fiscal from last year's Rs 3,000 crore.

"Tata Motors is committed to improve its customer centricity, to better understand customer needs and translate them into exciting and appropriate products for our markets," Mistry said. He said the firm's Indian operation was impacted heavily by the slowdown in the domestic automotive industry, as high interest rates and stagnation of growth in the sectors such as mining and infrastructure impacted demand.

The Nano, launched as the world's cheapest car, was billed to drive Tata Motors growth in the current decade. However, it has fallen way short of the company's expectation, making up for just 10% of its forecasted monthly volume of 20,000. Nano sales in FY13 fell 28% to 53,848 units.

In the first four months of the current fiscal, its sales were down 78.21% to 6,017 units. But sales have improved after March, when it fell to three digits.

In the last couple of months, Nano sales have been about 2,000 units per month even as Tata Motors has made aggressive finance offers, facilitated credit card and online purchases to spur sales.

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