MUMBAI, India – The Nano, a pint-sized $2,000 car designed to put car ownership within reach of millions of the world's poor, will hit India's congested streets in July, Tata Motors officials said Monday.
But whether the long-awaited 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.
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"All we set out to do was find a safe way to move Indian families at an affordable price," Ratan Tata, chairman of the sprawling Tata group of companies, told reporters Monday. "Never did we look at this as being an engineering achievement or a new paradigm."
But to environmentalists concerned about emissions and other carmakers scrambling to come up with ultra-cheap models of their own, it is just that.
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.
The four-seater can travel up to 65 miles an hour (105 kilometers an hour) and gets 55.5 miles to the gallon (23.6 kilometers per liter). The Nano does not have air bags or antilock brakes — neither of which is required in India — and if you want air conditioning or power windows, you'll have to pay extra.
Tata said the car emits less carbon dioxide than most motorbikes.
The Nano will go on sale in India in April, but the global economic downturn has emboldened Tata's export ambitions. 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 of 2011.
The company is now designing a version of the Nano that meets U.S. safety and emissions standards and should be ready for launch in about three years, Tata said.
"A year ago, I would have said the United States is not on our radar screen," Tata said. Now, he added, "We see an opportunity for a low-cost car. In this economic situation we can see perhaps there is a place for it."
Tata has no plans to export the Nano to China.
Other automakers have talked about following suit. Bajaj Auto, Renault and Nissan teamed up last year to make a car that wholesales for $2,500 in India by 2011.
Production of the Nano has been scaled back from initial targets — and the rollout has been delayed six months — because Tata Motors 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 the company to change plans.
The new factory, which will be able to produce up to 500,000 cars a year, will open by year's end, officials said. Until then, Tata Motors can only produce 50,000 cars a year from an existing plant in Pantnagar, in the northern Indian state of Uttaranchal.
Though Tata said he expects to eventually sell 1 million Nanos a year in India alone, few analysts predict the tiny car will be able to quickly turn around Tata Motors, which has been beset by flagging sales and high debt.
The company has been hard-hit 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 struggled 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 more than 7 million motorbikes sold in India last year.
"I have a bike. I will sell my bike and buy a Nano, because the four people in my family can sit in it," he said.
Ratan Tata won't speculate whether this is a Henry Ford moment for India. Ford famously paid his factory workers enough so that if they saved carefully, they'd be able to buy their own Model T.
The average salary at the Pantnagar factory is 150,000 rupees ($3,000) a year, company officials said. Ratan Tata said most workers there don't even own motorbikes.
"We bus them to work every day," he said.
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