Rising Nano demand worries suppliers

The new Tata Nano production facility in Gujarat, through which company is planning to reach a manufacturing capacity of 1,200 units of Nano a day by Dec 2010, has increased the troubles for automobile parts suppliers, who are already struggling to catch-up with the mounting demand from auto manufacturers in India.

The new facility of Tata Nano operates in a single shift of eight hours, which enables it to produce about 150 units of Nano in a single day. The company has already indicated that it will increase the production capacity at this unit to more than double if required. Besides this the company also has a production capacity at Pantnagar Uttarakhand, with a similar production capacity.

In last few months, the demand for compact cars has increased at very high pace in India. Recently launched cars in this segment like Chevrolet Beat, Ford Figo, Volkswagen Polo and new Maruti Wagon R are receiving an overwhelming response from the Indian buyers, which in turn has made it very difficult for auto component suppliers to meet this rising demand with their existing supplying capacities. There is an urgent need of capacity expansion in the Indian automobile industry.

According to an estimate the demand for cars in India is expected to touch the 6 million mark by year 2015 as against existing demand of 2 million units annually, which will generate a huge demand for auto-component and parts in the country. However, The auto-component industry as a whole is expected to invest around $2 million on capacity expansions to catch-up with this mounting demand .

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