Tata Motors shuts down Sanand plant for more than a month

Tata Motors has halted operations at its plant in Sanand, Gujarat, where it manufactures the Nano, for 35-40 days. The company claims that this shutdown has been implemented as per annual planning for routine upgrades, maintenance and adding of tooling flexibility for new variants. It could take between 3 and 6 weeks for the process.

However, it is believed that the reason for the shutdown is more than just the maintenance and upgradation of the plant. The Nano has failed to meet the company's expectations with respect to sales and the supply has far exceeded its demand. This has led to inventory pile-up - it is estimated that there are 8,000-10,000 units of the Nano lying unsold, including some cars built in 2013.

The Sanand plant, which was built with an investment of Rs. 2,000 crore, has an annual capacity of 2,50,000 units. However, in FY 14, it rolled out just 21,538 units of the Nano. Due to the low demand for the car, the company has been keeping the plant operational for just 2-3 days a week over the last six months. In the same period the plant has manufactured just 2,000-2,400 cars per month.

However, the company is not giving up on the Nano. It is working on repositioning it as a smart city car with variants like the power steering-equipped Nano Twist XT and the upcoming Twist Active which will feature Automated Manual Transmission (AMT).

Tata Motors is also restructuring its production strategy. The company plans to increase the Sanand plant's viability by using it to manufacture a new small car, which has been codenamed 'Kite'. The plant is expected to roll out 1,50,000 units of the Kite annually.

Source: ET Auto