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While revolutionizing the Indian car market with its breakthrough budget pricing, the mad rush for the Nano is likely to result in a windfall for cash-starved Tata Motors that is likely to adopt a direct sale model for the car with a unique distribution plan.

According to sources, Tata Motors will not adopt the ‘conventional’ retail model for the sale of the Nano wherein dealers buy the cars from the company and then sell them to customers through their retail outlets. ‘‘ Tata Motors is believed to have gone for a different strategy for the Nano, considering that the model will receive mind-boggling response from people that would be much higher than the estimated 50,000-60 ,000 units it would sell in the first year, or at least till the company’s Nano-dedicated plant in Gujarat comes up,’’ sources said.

As per the Nano plan, Tata Motors will accept direct bookings for the model, through branches of State Bank of India as well as the company’s dealerships. The company is likely to ask for cash down of Rs 70000 with each booking and even the booking forms would come for a price, believed to be Rs 500. “All the deposits would therefore be available with Tata Motors for a few months, at least till the time the company decides on who gets the cars,” the sources said.

This means that even if the company accepts bookings from at least 1 Lakh customers to begin with, it will get access to Rs 700 Crore cash. Dealer sources though said that the amount that Tata Motors would collect through this process could be in excess of Rs 1000 Crore as it would accept bookings from over 1 Lakh people. “It is believed that the company will adopt a lottery system to decide the winners of the first lot of Nano’s as the demand will be much more than the cars it produces,” the sources said. The deliveries would be staggered for the coming months.

[Source: EconomicTimes]

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