The Light Is Green: Nano: Tata's $2500 People's Car is here

March 25, 2008

Nano: Tata's $2500 People's Car is here

One hundred years ago the original "People's Car", Henry Ford's Model T, rolled off the assembly line. Priced at one third the U.S. per capita income, the Model T had a very clear and world-changing goal: to make cars available to everyone.

Now, Indian powerhouse Tata Motors has released the Nano, this century's People's Car (also known in the media as the One Lakh Car). The Nano was recently unveiled at the Delhi Auto Show by the car's originator, Tata CEO Ratan Tata. The Nano also costs roughly 1/3 the Indian per capita income.

The Nano will be built at Tata's upcoming plant in West Bengal, India, with a capacity of 200,000 units (expandable to 350,000). Tata has a goal of selling 1 million cars a year and expand to other countries.

The Nano's $2500 price tag makes it the cheapest car in the world. The next two are China's Chery QQ ($4,781) and the also Indian Maruti Suzuki 800 ($4,994). And further down the list are the more established Chevrolet Aveo at $9900, cheapest in the U.S.; the Daihatsu Esse ($6000, Japan); and the Renault Dacia Logan ($12,000, Europe).

Ratan Tata says the Nano venture is profitable, something that several manufacturers were/are in doubt of.

Ratan Tata The Nano is a five-door hatchback, has one long windshield wiper and only one side-view mirror. It's powered by a patented two cylinder 623cc gasoline engine, has a top speed of 105 km/h (65 mph), and gets 54 miles per gallon or 4.4 liters/100 km.

It has limitations, of course: it lacks air conditioning, power steering, central locking, air bags and other basic security features. Though it complies with Indian emissions and safety regulations in India, it does not in the U.S., Europe and Japan. But for the Nano's intended market, that doesn't matter for now.

Potential setbacks for the Nano?

1. Higher cost: As global concern for the environment grows, India is expected to soon tighten their emissions regulations; this may have an impact on the Nano's price.

Tata Nano - People's Car 2. Competition. Renault-Nissan (with Bajaj Auto), Toyota, Honda, Ford and Fiat have announced their intention of producing a comparable low-cost car. Tata has a big advantage in India thanks to their unbeatable reputation and local heritage. Also, Tata has done a great job building up expectations for the Nano, and public reaction has been very enthusiastic.