The newest car to hit the market won’t be sold in the US, but it is getting a lot of global attention for one big reason: its extraordinarily low price. Arriving at dealers at a cost of $1945 (to dealers), the Tata Nano offers 1960s era pricing with similar era product build. No 
matter, compared to what most Indian consumers drive, which includes motorcycles and scooters, the Nano will give them at least a roof over their heads. Literally.
First conceived in 2003, the Nano was announced to the world in January 2008 with production expected to begin that Fall. Political problems in one Indian state forced Tata Motors to change its plans, moving the factory to a much more receptive state clear across India. That delay along with the rapidly dropping economy has taken its toll on the automaker, but their plans to sell the Nano remain unchanged.
Tata Motors is also digesting its purchase of British automotive icons Jaguar and Land Rover, having borrowed two billion dollars last June to seal that deal. Tata must come up with the money by this June or seek refinancing of its debt. That latter option could be more difficult to arrange given the state of the world economy.
The automaker hasn’t said what sort of profit lines it will have with the Nano. Given that virtually all small cars are produced more for enhancing volume (and introducing consumers to the brand) than for making money, Tata will have to rely upon higher contented versions of the Nano to turn a profit. Indeed, Tata is looking at producing a European spec version of the car, one that will sell for approximately three times the price as the Indian Nano but include all of the required safety features and consumer enhancements for that market.
Other automakers are looking at building Nano competing models, but those cars aren’t likely to match the Nano in price. For some manufacturers building a budget scraping car amounts to a fool’s errand, one that won’t produce the profits necessary to sustain the model or enhance brand imaging.
See Also: Nissan, Renault to Tackle Tata Nano
It was supposed to have begun rolling off a West Bengali assembly line this month, but the Tata Nano’s release has been delayed due to political clashes in that volatile Indian state. Instead, the automaker has found a new home for the Tata Nano in Gujarat, which is an Indian state that is much more receptive to welcoming modern industry.
Leaving West Bengal For Gujarat
To be fair, Tata’s adventure into West Bengal met with stiff resistance because farmers were not being adequately compensated for land that was taken from them by the state government and sold to Tata Motors at a bargain rate. An opposition political party fueled the farmers’ discontent by organizing protests, including deadly battles that eventually forced CEO Ratan Tata to move his factory elsewhere.
The delay has caused some concern for automotive analysts who wondered whether Tata would still be able to develop the Nano and sell it for the US equivalent of $2500, a previously unheard of price level. The rising costs of raw materials, fuel, and land acquisition and labor costs have cast that price in doubt, but Tata hasn’t said yet whether the price point would have to be raised.
The $2500 Tata Nano
The Tata Nano, simple as it is, is considered to be a revolutionary car in that it will open up automotive ownership to many of India’s 1.1 billion people who otherwise could not afford a car. In India, families will often load up on a motorcycle to travel across the city or to outlining destinations, as an alternative means of transport to overcrowded bus and train travel. However, injuries and deaths from motorcycle accidents is quite high, leading to Tata Motors developing an alternative in the form of a bare bones passenger car that can seat as many as five passengers.
The Gujarat deal came at the backing of the state government which was quick to offer a package to Tata Motors that beat out packages prepared by neighboring states. Although the country is a democratic republic, Indian states weld significant power and have the authority to craft major initiatives apart from federal control. This can work both for and against a company, something Tata Motors discovered when the West Bengal deal fell through and the Gujarat deal quickly came to place.
As for the Nano, production will begin as soon as all of the land surrounding the factory location has been cleared and the factory built. What would take at least a year or longer in the US to complete, will be done in a matter of months, with the first Nanos expected to roll off a Gujarat assembly line in early 2009.
Source: Tata Motors
First revealed at the beginning of the year, the Tata Nano received unprecedented attention for Indian automaker, Tata Motors. If you never heard of Tata previously, then you most likely did when the company announced that they were building a car that would retail for the US equivalent of $2500.
Yesterday, The Wall Street Journal reported that Tata would begin production of the Tata Nano during the fourth quarter of this year, with a starting price of $2300 pegged. To keep costs from spiraling, the company also announced that they would tone down publicity in a bid to cap overhead.
Tata Motors is constructing a plant in Singur, located in the state of West Bengal. The facility will be able to expand to keep up with demand, likely to boost Tata Motors’ share of the Indian market substantially.
The company absorbed British automakers Jaguar and LandRover earlier this year and is attempting to deal with a higher cost of materials due to elevated fuel prices, vehicle financing availability, and a global economical downturn.
The four passenger Tata Nano will feature a 2-cylinder 623cc engine that will be located in the rear of the rear wheel drive car. Estimated fuel economy numbers for US roads are about 50 mpg city and 60 mpg highway. The car will be available in India only with export to Europe expected within the next few years. There are no plans to bring the car to North America.
Auto News | Matt Keegan, 23 Mar 09 | 
Comments (3) 
