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Nobody wants 'El Cheapo Nano'

2012-01-24 09:04

ON THE CHEAP: What was meant to be the Tata Nano's biggest selling point - it's price - is proving to be its biggest problem.

NEW DELHI, India - When India's Tata Motors launched the Nano in 2009 the concept of "the world's cheapest car" in one of the world's fastest-growing auto markets seemed destined for commercial success.

Logically, the strategy appeared faultless - offering an affordable solution to millions of aspirational lower middle-class Indian families wanting to make the social and practical leap from two wheels to four. There was a huge surge of interest in South Africa, too.

However, after several years of disappointing sales, it has now become clear that the snub-nosed hatch's unique selling point - it's price - was really a commercial sticking point. Rather than embracing the Nano, the status-conscious consumer base that was its prime target has largely shunned the "cheap" tag of the $2800 (roughly R22 200) vehicle and opted for slightly pricier rivals, or second-hand vehicles costing the same.


Punnoose Tharyan, editor of India's Motown magazine, said: "A Nano is always bandied about as a poor man's car. Nobody wants to be caught with it."

Sales are far off the target of 25 000 a month and the Nano plant, with an annual capacity 250 000 units, produces only 10 000 a month, according to R Ramakrishnan, business head of Tata Motors' cars.

Indian automobile expert Murad Ali Baig said: "The car didn't project the right image. Also, for the same cost as the Nano, there are quite respectable second-hand cars - with air-conditioning."

The base model, sold without aircon so at a serious disadvantage in India's steamy heat, costs 140 880 rupees (R22 200). The premium version - aircon, central locking, power front windows - is 196 959 rupees.

The Nano ran into trouble from the start when a land acquisition row forced Tata to abandon a nearly completed plant and build another, badly delaying production. There were also safety concerns after a number of cars caught fire. Now Tata Motors, which also owns the British luxury Jaguar and Land Rover brands, has gone into damage control mode. Tata boss Ratan Tata conceded this month that mistakes had been made which had fuelled the perception of the Nano as "a poor man's vehicle".


"Whatever stigma has been attached to it, we will undo," Ratan Tata said, insisting that the Nano had always been intended as an affordable, all-weather, family car. To get sales on track, Tata has given the car a makeover, making it available in more colours, including gold and orange, and sprucing up the interior - but not raising the price.

It has also offered a "Tata Nano Happiness Guarantee" which more than doubles the car's warranty to four years from 18 months and throws in a maintenance contract for 99 rupees a month.

It is offering "fast-track" financing for buyers who need a loan to buy the car - with approval in 48 hours. Also, buyers can put down only R2380 and drive a Nano out of the showroom.

Tata Motors India managing director Prakash Telang said: "Let’s say at first it moved a little slowly in the market but now we have understood customers' requirements."

He's also convinced that the potential Nano market remains as vast as its makers originally predicted.

"Car penetration in India is about 10 per 1000 people. The West is about 400 per 1000," Telang said. "The market will continue to grow rapidly."

Typical of the buyers Telang has in mind is Dira Singh, who has a wife and two children and recently upgraded from a motorcycle to a shiny blue Nano.

"The Nano was in my budget. It wasn't costly and that's why I took it," Singh said, standing proudly beside the vehicle. "It will protect my family."

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