Tata unveils Nano, its $2,500 car

10 Jan
The World’s Cheapest Car – Nano, $2,500
The long-awaited Indian ‘People’s Car’ aims to replace the scooter in first-time buyers’ hearts. Though you won’t see it in the West anytime soon, it could signal a wave of lower-priced cars to come.
By MSN Money staff and wire reports
Tata's $2,500 car © Tata

India’s Tata Motors today unveiled the Nano, its much-anticipated $2,500 car, an ultracheap price tag that brings car ownership into the reach of tens of millions of people.

Company Chairman Ratan Tata, introducing the Nano during India’s main auto show in New Delhi, drove onto a stage in a white version of the tiny four-door subcompact, his head nearly touching the roof.

With a snub nose and a sloping roof, the world’s cheapest car can hold five people — if they squeeze. And the basic version is spare: There’s no radio, no air bags, no passenger-side mirror and only one windshield wiper. If you want air conditioning to cope with India’s brutal summers, you need to get the deluxe version.

At 10 feet long, the Nano is about 2 feet shorter than a Mini Cooper. Its 623-cubic-centimeter two-cylinder engine is estimated to produce about 35 horsepower, good for a top speed of 75 mph.

Though the price has created a buzz, critics say the Nano could lead to possibly millions more automobiles hitting already clogged Indian roads, adding to mounting air and noise pollution. Others have said Tata (TTM, news, msgs) will have to sacrifice quality and safety standards to meet the target price.

The chairman, though, insists the car will meet safety standards and pollute even less than motorcycles, passing domestic and European emission standards and averaging about 50 miles per gallon.

Chief U.N. climate scientist Rajendra Pachauri, who shared last year’s Nobel Peace Prize, said last month that "I am having nightmares" about the prospect of the low-cost car.

Tata's $2,500 car (C) Tata

"Dr. Pachauri need not have nightmares," Ratan Tata said at the unveiling.

"For us it’s a milestone, and I hope we can make a contribution to the country."

‘A promise is a promise’

The Nano — its working name was the "People’s Car" — is just half the price of the next-cheapest car in the world, a Chery Automobiles QQ3 sold only in its domestic market of China. The $5,200 Suzuki Maruti is the current least expensive option for Indians, where per capita incomes are nearing $1,000 after years of explosive economic growth. In the U.S., the cheapest option is the Chevrolet Aveo, which, at $10,030, is four times the price of Nano.

In India, there are fewer than 10 cars for every thousand people, compared with 40 per thousand in China — and 450 in the U.S. Indians bought about 1 million cars in 2007. Far more middle-class Indians buy and transport their entire families on scooters.

"That’s what drove me," founder Ratan Tata writes on the company Web site. "A man on a two-wheeler with a child standing in front, his wife sitting behind, add to that the wet roads — a family in potential danger."

The basic model will sell for 100,000 rupees — $2,500 — but analysts estimate that customers could pay 20% to 30% more than that to cover taxes, delivery and other charges.

Tata has long promised that he’d create a 100,000-rupee car, a vow that was much-derided in the global industry but created a frenzy of attention in India. On Thursday, nearly every news station covered the unveiling live.

"A promise is a promise," Tata told the crowd.

Opportunities huge, and so are potential pitfalls

The company has said it expects the car to revolutionize the auto industry, and analysts believe the Nano may force other manufacturers to lower their own pricing. French automaker Renault and its Japanese partner, Nissan Motor, are trying to determine whether they could sell a compact car for less than $3,000.

For now, the car will be sold only in India, but Tata has said it eventually hopes to export it. The Nano could become the basis for other similar supercheap models in developing markets around the world.

As rising middle-class incomes drive demand for cars in India, automakers expect the ranks of car owners in the country to expand dramatically in coming years.

But for some, a huge influx of cars is a terrifying prospect of traffic jams at midnight, hours-long commutes and increasing pollution.

"If you’re talking about urban environment, it will cause serious problems," said Jamie Leather, a transport specialist with the Asian Development Bank. "It’s a major concern."

In 2005, Indian vehicles released 219 million tons of carbon dioxide, the leading greenhouse gas blamed for global warming.

By 2035, that number is projected to increase to 1.5 billion tons, due largely to the expanding middle class and the expected rise of low-cost cars, according to the Asian Development Bank.

"The cheaper and cheaper vehicles become, the quicker those pollution levels will increase," Leather said.

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Posted by on January 10, 2008 in Travel


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