MUMBAI (AFP) – Tata Motors on Monday launches the world’s cheapest car, the Nano, hoping to revolutionise travel for millions of Indians and buck a slump in auto sales caused by the global economic crisis.
Company boss Ratan Tata hopes the car, which is slated to cost just 100,000 rupees (2,000 dollars) for the no-frills model, will get India’s middle-class urban population off motorcycles and into safer four-wheelers.
“I observed families riding on two-wheelers, the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby,” he said when displaying the prototype last year.
“It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family.”
Demand is expected to outstrip supply with production limited to just 30,000 to 50,000 cars in the first year because of limited production capacity — a fraction of the original target of 250,000, auto analysts said.
“There’s no safety in two-wheelers especially with the whole family,” said New Delhi resident Ganesh Khand, 38, who now has a motorbike but wants a Nano to be able to transport his wife and two daughters safely.
Even the more affluent Indians are eyeing up the Nano, which has a two-cylinder engine, four-speed manual transmission and a top speed of 105 kilometres (65 miles) per hour.
It has no air conditioning, electric windows or power steering, but deluxe versions will be available.
“This is a value-for-money car,” said Hasmukh Kakadia, 39, a Mumbai investment analyst.
Shares of Tata Motors jumped as much as eight percent early Monday to hit an intraday high of 173.85 before retracing on profit-taking to 166.70 rupees, still up 3.60 percent, or 5.80 rupees, and outperforming the broader market.
Dealers say they have been flooded with queries about the car, whose debut was delayed after violent protests over the acquisition of farmland to build the Nano plant, forcing Tata Motors to shift from West Bengal state to Gujarat.
But the new plant in western India will not be ready until late 2010, meaning production must come from existing factories, reducing output and potentially increasing waiting times for deliveries.
The launch comes at a tough time for India’s top vehicle maker, hit by the economic slowdown and credit crunch at home and abroad — at a time when it is trying to absorb the British luxury marques Jaguar and Land Rover,which it bought last year for 2.3 billion dollars.
In the long-term, Tata is hoping the Nano will also be a hit overseas.
Earlier this month, the firm unveiled a European Nano sporting airbags and leather trim that will hit the market by 2011 but be costlier than in India due to the extra features.
But environmentalists fear the Nano will accelerate congestion on India’s already crowded, pot-holed roads and add to choking pollution.
“Every car that goes on the road is going to use road space. We’re only adding to congestion,” said Rajendra Pachauri, head of the UN’s climate panel, which won the 2007 Nobel Prize.