>Tata Motors' Nano Update (RELIANCE MONEY)

Launch of Tata Motors' Nano

Tata Motors has formally launched Nano across India. It had showcased the first Nano in January 2008, during Auto Expo 2008. The base version is priced at Rs.1,12,735 (ex-mumbai) and higher version is priced at Rs.170,335 (ex- Pantnagar). The company has decided booking amount of Rs.95,000 for Nano and has also promised to give price protection for first 100,000 cars. We estimate FY10E would see revenue addition of ~Rs.6bn (~2.2% of FY10E revenue) and insignificant incremental EPS for FY10E.

Nano – Big Wonder is here
Tata Motors has launched much awaited Nano across the country. Earlier the company has promised to launch the car in Mid-2008, but after facing many hurdles it first showcased it in Auto Expo in January 2008, finally Tata Motors has launched the car. It’s a 623cc, 33 HP, the engine meets BS3 and is capable to being scaled up to Euro 4. It is approximately 8% smaller compared to Maruti 800, but 21% larger in terms of passenger space. Nano is expected to give mileage of 23kmpl. The car has satisfied front crash test and satisfies European recycle norms.

Expect strong response for Nano bookings
Tata Motors has already said that Nano bookings will be open from 9th April 2009 and would remain open till 25th April 2009. Looking at the initial response at Auto Expo 2008 and response from various categories, we expect strong response for Nano bookings. The company would start distributing Nano from 9th July 2009. Tata Motors has also revealed that the car will be up for grabs under the financing mode which starts at an attractive booking amount of Rs.3,000/- per vehicle. While, for others who do not wish to opt the financing mode will have to make a heavy down payment of Rs.0.95L-Rs.1.4L (~75% of total amount). We believe that the other mode, wherein down payment is very heavy will not be that attractive for the customers, while for the financing mode the rate of Interest is likely to be a key factor towards the booking, which is still not disclosed.

To see full report: NANO