It is important to Tata to meet its year end deadline to introduce Nano to the Indian car market. Tata Nano has been one of the most ambitious projects for the company but the rising costs of inputs are making it seems harder to meet the deadline or keep the prices under check.
Vendors have been reeling under the 40% hike in steel prices. Senior officials from the company are meeting the vendors to discuss hike in previously negotiated prices.
Company officials refuse to comment on such meeting stating that meetings between company and its suppliers are supposed to be confidential.
Vendors have been asking nearly 30-35% hike in their previously negotiated prices. One of the senior vendors to Tata Motors, Maruti Suzuki and Hero Honda Motors quotes, ““It is impossible for us to continue supplying to the company, especially for the Nano project, at prices that were fixed so long back. Steel has become so expensive that it does not even make sense for us to continue supplying to the project.”
As steel constitutes nearly 60% of the manufacturing costs, a slight increase in the prices can disarray the overall cost of the car. What remains to be seen how Tata keeps the price under check or would revise the rates as per the prevailing market conditions.
