MUMBAI/NEW DELHI/AHMEDABAD: If it was out-of-the-box thinking that led to the birth of the Nano in 2003, it is a similar stream of innovative

marketing ideas that is now helping resuscitate the Rs1-lakh car after sales crashed to a mere 509 units last November. Since then, a crack team at Tata Motors that reworked execution strategy and put in place a new and unconventional distribution system, has helped Nano sales drive past the 10,000 units mark in April. This is the highest monthly sales since the car hit the roads in July 2009.

Two moves stand out in the Nano revival plan. First, Tata Motors set up 210 'F Class showrooms', each only about 500 sq ft in size and stocking just one car in smaller towns, and hired 1,200 people to man them. Second, it tied up with value retailer Big Bazaar to gain traction among the 150 million footfalls the retailer gets every year. "There is a Nano parked in every Big Bazaar outlet and the touch and feel experience has accelerated decision-making, especially in smaller towns," says Future Group Customer Strategy President Sandip Tarkas, who heads this initiative at Big Bazaar. The chain has 70 outlets in smaller cities and towns. "This has contributed to Nano sales in a big way," sources involved in this tie-up say on condition of anonymity. Both ideas were aimed at taking the car closer to the consumer segments it was designed for geographically and psychographically. Both seem to have clicked. "There is a 35% jump in orders since March," says Nisheeth Mehta of Microsign Products, a Bhavnagarbased vendor who supplies fasteners for the Nano. "The company is aiming to scale Nano production to 10,000 units from 5,000 units now, in three months," adds a Rajkot-based vendor executive supplying connecting rods. Tata Motors officials declined comment. Industry watchers, however, say some of the sales growth is the result of high incentives being offered on the Nano. Dealers get support to carry more stocks "Dealers are being supported to carry more stocks," says a dealer on condition of anonymity. For example, two dealers say Tata Motors is giving the Nano on a 30-day interest-free credit against a cashand-carry model for its other vehicles. Company officials deny this though. Sources close to the company say they are not 'pushing' sales and that inventory is manageable. Industry officials feel Nano sales could stabilise around 8,000 units per month. But even that, according to analysts, will be only half the volumes Tata Motors would require to make profits on the Nano. "The company would have to up the run-rate to 15,000 Nanos a month to achieve break-even," says Mahantesh Sabarad, analyst at Fortune Financials. "As sales grow, the marketing expenses are also growing. So, the rising sales are not yet providing a margin uptick." The Nano ran into three problems soon after its launch. One, about half-a-dozen incidents of smoke and fire were reported by Nano users.

Two, the pay-first, drive-later booking model adopted by the com-pany attracted a bunch of customers the car wasn't quite intended for. Of the 2.06 lakh bookings it got initially, a big chunk were urban buyers who were actually purchasing this as a second car. But the initial excitement soon wore off and sales dipped. And three, the distribution strategy failed to bridge the last mile to the consumer segment that group chairman Ratan Tata built this car for. Lower income customers were apprehensive and hesitant to walk into large Tata Motors showrooms. "All three problems have now been corrected," a senior company official says on condition of anonymity. The Nano has been re-engineered to fix the issues related to the fire and none have been reported in the past two months. A 8-10 member crack team headed by R Ramakrishnan, VP (commercial-passenger cars), and Girish Wagh, vice-president & head (small car project), are constantly monitoring the Nano's progress, say top officials. An unre-lenting focus on the target customer segment is being maintained, even as the company is expanding its distribution network for the Nano to more small towns. The F-class showrooms are less intimidating than the 3,000-4,000 sq ft conventional showrooms, and are attracting walk-ins. "Tata Motors' focus on tier-II cities is a correct strategy since these are natural markets for the Nano," says Abheek Singhi, partner & director of The Boston Consulting Group. "But I do not think rural will be a good market; the vehicle would have to be more rugged for that." Tata Motors has also improved financing options and announced new measures such as a four-year or 60,000-km manufacturer's warranty at no extra cost, and an option to avail a comprehensive maintenance contract for Rs 99 per month. In April, even as the Nano registered its best sales ever, the automotive industry saw a sharp deceleration. Industry sales in April grew only 13%, after a 30% growth recorded in FY11. The Nano bucked this trend, but it is still ranked only 14th in the best-sellers list, way behind the Alto, Swift, Wagon R and even bigger cars like the Dzire. There is still a long, hard road ahead for the car that once hoped to top the charts.