VOLUME 28 NO. 14 | MARCH 28 - APRIL 3, 2009

India’s Tata Motors to launch $2,000 Nano

Last updated 3-26-09 at 8:20 a.m.

By Erika Kinetz
The Associated Press

MUMBAI, India (AP) — Tata Motors is launching its snub-nosed, $2,000 Nano on Monday — a vehicle meant to put car ownership within reach of millions of the world’s poor.

But whether the Nano will revolutionize the global auto industry — or turn around its manufacturer’s fortunes — has yet to be seen. Other automakers will be watching closely to see how consumers respond to the car.

The Nano, starting at about 100,000 rupees ($1,980), is a stripped-down car for stripped-down times: It is 10.2 feet (3.1 meters) long, has one windshield wiper, a 623cc rear engine, and a diminutive trunk, according to the company’s Web site.

So far, the car will only be sold in India, although Tata Motors unveiled the Nano Europa, a slightly more robust version of the Indian model, at the Geneva Motor Show this month, with a planned launch in 2011. The company has no plans to bring the Nano to the United States anytime soon.

It does not have air bags or antilock brakes — neither of which is required in India — and if you want air conditioning, a radio, or power steering, you’ll have to pay extra. The Nano will be officially launched at a ceremony in Mumbai later Monday, with models arriving in showrooms in April.

Production of the car has been scaled back from initial targets — and the rollout has been delayed six months — because Tata had to move its Nano factory from West Bengal to the business-friendly state of Gujarat. Violent protests by farmers and opposition political party leaders over land at the initial site forced Tata to change plans.

Company officials have said it will take at least a year to complete the new factory, and until then, Tata will only be able to produce a limited number of Nanos from its other car plants in India.

Tata Motors hasn’t yet given details on production volumes, but most analysts doubt the company will be able to make more than 50,000 cars in the next year — a far cry from the 250,000 the company had planned to roll out initially.

Few analysts predict the tiny car will be able to turn around Tata Motors, which has been beset by flagging sales and high debt, anytime soon.

The company has been hit hard by the global downturn. Commercial vehicle sales, its core business, have been decimated as India’s growth slows, and consumers have had trouble getting affordable car loans.

Tata Motors declared a loss of 2.63 billion rupees ($54 million) for the October to December quarter, and it has been struggling to refinance the remaining $2 billion of a $3 billion loan it took to buy the Jaguar and Land Rover brands from Ford Motor Co. in June.

Vaishali Jajoo, auto analyst at Mumbai’s Angel Broking, said even if Tata Motors manages to sell 250,000 Nanos a year, it will only add 3 percent to the company’s total revenues.

“That doesn’t make a significant difference to the top line. And for the bottom line, it will take five to six years to break even,” Jajoo said.

Still, analysts say the car could appeal to frugal car owners seeking a second vehicle as well as people like Mario Jonsamuel, who has never bought a car but owns one of the approximate 7 million motorbikes sold in India last year.

“I have a bike. I will sell my bike and buy a Nano, so that the four people in my family can sit in it,” he said. (end)


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