Nano booking terms unethical-Lets not book Nano

As mentioned earlier in one of my blogs, people should not get carried away by booking the Nano car. As mentioned earlier, the terms of booking the Nano cars are unethical for the following reasons:

(a) No interest to be paid for the first three months. Interest income of Tata for 3 months works out to be Rs. 150 crores on the expected booking amount of Rs. 5000 crores.

(b) The application form can be printed for not more than Rs. 5. It is being sold for Rs. 300. With 5 lakh expected bookings, Tata wll make Rs. 14.75 crores.

(c) Rs. 500 as processing fee will net Tatas Rs. 25 crores. The cost of processing to Tatas would be a maximum of Rs. 2 crores. Tatas should use the net to get the forms filled by the customers, ask them to print the forms and deposit the same with the banks alongwith the payment. There would be no need to sell the forms and processing fee would not be required. The interest saved should cover up all the processing costs.

(d) The banks are also expected to charge additional processing fee.

(e) Tatas are going to pay 8.5% interest but the banks are charging 10%. Customers will have to bridge the gap.

(f) Tatas are taking nearly the full cost of the car as advance. I think this is just unethical and a fraud on the general public. They would not have the cars to sell to the people. Tatas have claimed that in the first year, they can only deliver 100,000 cars and that they will be able to raise their capacity to 500,000 cars in the second year. Now we all know that in our beloved country nothing goes according to plan. So when the cars would be finally delivered, only God knows. When you know that you can deliver only 1 lakh cars in the first year, where is the need to take almost 100% advance from all the expected 5 lakh customers who will book the car.

Even to book a Vespa scooter or a Fiat car in the good old days one didn’t have to shell out processing fee as Tatas are asking its customers to do. Tatas should be using technology to make the process easier as well as cost effective. It somehow feels that Tatas have beaten even the government in trying to make things difficult for its customers. Tatas can give me a few lakhs and I will set-up a net based system to book the car. The government is becoming net savy while the Tatas are going the other way around. Why? Somple, they need the money for the costly acquisitions that they have made. Who pays for it. The poor dumb customer.

I think Mr. Ratan Tata must have read the philosophy of General Patton who said, “You don’t win a war by dying for your country. You win it by making the poor dumb bastard die for his.” Mr Ratan Tata has applied it creatively to his own business philosophy which states, “You don’t acquire big companies with your own money. You acquire it by making the poor dumb sucker customer pay for it.”

Also, people should be aware that nobody knows how the vehicle will perform. Taking the price tag into account, I think you need to err on the side of caution.

Further, I think quite a few people are thinking that they will make money from booking the car as in the past. I very much doubt that for the following reasons:

* Tatas are already taking away from you a part of the expected premium. Various processing fees total over Rs. 1000. Customers will also have to account for the interest lost.
* After the initial hype, I doubt there will much of a premium.
* The competitors are all watching closely the customer’s reaction after he buys and uses the car. I think you will find that if Nano does well, most car manufacturers like Maruti and Hyndai would reduce their prices. The closer the price gap, the less the chances of their being a premium.

Taking the unethical terms of the booking, Tatas are probably thinking that they will not get a chance again to book the car so lets take away as much money as we can. I don’t think they expect the sun to keep shining and so want to skim the market and “make hay while the sun shines.” The hype is going to be there for so long.

I also feel that this is a public interest issue and that the government should ensure the safety of public money. This is like companies taking a deposit from the public which is subject certain restrictions. What happens if Tatas are not able to return the money. After all we have seen business conditions can change. Also, God forbid that the Nano does not get good market review and everyone wants his money back. What will happen? By that time Tatas will have used to pay debt or invest in JLR. I think it was because of this reason that the booking amount for Vespa/Bajaj Scooters was deposited at post offices. Why can’t Tatas let the customers deposit the money in the PSU banks. The customer will earn interest on it as well as his money will be safe.

At times I feel that maybe whatever Tatas are doing is OK as I strongly believe in the free market system and in the concept of “Buyer’s Beware.” The least I can do is make the buyer aware of the risks and issues involved and then let him take the decision. I can just give my opinion which is “Do not book the Nano car till Tatas come up with a reasonable terms.”

Avinash Narula

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Comments

Yours is the first article describing very valid reasons for the improper way Nano is being sold to Indian people.
Thanks for your exhaustive analysis.

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You are exactly on the dot. Surprisingly, no media is highlighting this plain truth. Your article needs wide circulation. Thank you very much.

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Yes, v good article. The very stupid, corrupt government this lovely country has had the misfortune of having will not look into it, and the corporates make hay too.(they (govt) are absolute idiots, as can be seen by the condition the country is in – poverty and all after 60 years. Not everyone is an idiot though, maybe thats why things somehow limp along) I am for free market too, but it amazes me that a poor country like India has such high interest rates, and a company (including govt org like DDA) can sit on people’s money for 3 months without interest !!! and without providing high quality products really. Lets hope things will change…

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Facts:

In Management we read the Term Monopoly Business

1. No Option is Available for the customers to buy a new car in this price range although the customer has to go for buying the Nano which is ultimately beneficial to Tata.

2. This Situation will prevail in the market untill some other manufacturer of Small car comes forward.

3. Till that time the tata will enjoy the fruits.

4. As Tata is giving an offer to the prospected buyers it is for the buyer to decide whether to invest the money in purchase of car. It is reputation and the goodwill of Tata that people are so anxious to get the Nano. There is no Compulsion to buy the car.

So its your wish to buy the car, use your logics, do calculations and then invest money because its all your hard earned money.

Under the regime of this bastard congress party even you also can enjoy the fruits if you have any new concept to make fool others. Bring the money making concept (ethical or unethical) take the approval from Govt, implement it and enjoy it. No Country, No People, No Environment, No Ethics, No Moral for this bastard Congress Govt. It understands only the language of Money… Money & Money….

It is really shame on public of our country who was suffering since many years.. and also ready to suffer in future also……

I really want to say that India does not have the Democratic System it has the “Dangerocratic” system where only the danger people can rule the country… Come-on, lets save our respected country from the hands of unethical and dangerous people and make the future bright.

Amit Gaosandhe
amitramkrishna@gmail.com
9826094194

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Good findings Avinash..I really didn’t think of all this. But now i’ll look for all these calculations and only then i’ll go for its booking..Thanks

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Brother. You said it. I completely agree coz even i was about to be a victim of this scene of crime.

Thanks.
Perveiz Sheikh

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