MercoPress. South Atlantic News Agency

Cheapest car for $2,500; targets Indian families

Ratan Tata, CEO of Tata Group, poses with new Nano car

Tata Motors Ltd., India's largest truckmaker, unveiled the country's cheapest car, pricing it at 100,000 rupees ($2,500) as it aims to convince the nation's 45 million motorcycle riders to trade up to four wheels.

Ratan Tata, 70, the company's chairman, displayed the Nano at the Delhi auto show today. The company will also offer more expensive versions with features such as air conditioning and will start sales later this year, he said. ''A promise is a promise,'' said Tata, a Cornell University-trained architect, reiterating the price the company set more than five years ago when it began developing the model. Mumbai-based Tata, lagging behind Suzuki Motor Corp. in local sales, is targeting motorcycle owners in India even as environmentalists raise concerns about pollution and traffic. India's government estimates annual car sales in the country will triple to 3 million by 2015. ''It's a big, big bet by Tata,'' said Amit Kasat, a Mumbai- based analyst at Motilal Oswal Securities Ltd., who recommends investors buy Tata's stock. ''The automotive world will be keenly watching how it plays out, so that car companies can make their own adaptations for similar-priced cars.'' Tata Motors, also in talks to buy Ford Motor Co.'s Jaguar and Land Rover brands, fell 2.8 percent in Mumbai trading after rising as much as 4.1 percent to 802.3 rupees after the car was unveiled. Maruti Suzuki India Ltd., Suzuki's local unit and India's largest carmaker, declined 2 percent to 907.65 rupees. Almost seven motorcycles are sold for every car in India, where about half the population of 1.1 billion live on less than $2 a day, according to World Bank. Per-capita income has doubled since 2000, and the economy has expanded 9 percent a year since 2005, making it the world's fastest-growing major economy after China. The Nano will cost almost half as much as Suzuki's Maruti 800, the cheapest car currently on the market. Tata said the car will be powered by a two-cylinder, 623-cc engine mounted in the back, with 33 horsepower, and can seat four to five people. It will meet all safety requirements in India, he said. The Nano will get an estimated 20 kilometers on a liter of gasoline (47 miles per gallon) and a diesel version will follow. With oil rising to $100 a barrel, automakers must improve fuel efficiency, and Tata's car may be a starting point, said A.S. Thiyaga Rajan, who manages $250 million as managing director of Singapore-based Aquarius Investment Advisors Pte. ''The global race to get a cheap, fuel-efficient car is on furiously,'' said Rajan. ''As long as the design looks good and the safety standards are met, then there will be thousands of hungry buyers.'' Renault SA, France's second-largest carmaker, is in talks with Pune, India-based Bajaj Auto Ltd. to build cars that may cost about $3,000, and Renault would eventually export such vehicles to the U.S. and sell them for $5,000 with modifications, Chief Executive Officer Carlos Ghosn said Oct. 26. Tata's car could ''jam cities'' and raise pollution, according to the Centre for Science and Environment, which has led a campaign for cleaner air in New Delhi. Average vehicle speed in India's capital has dropped to 15 kilometers an hour in 2002 from as much as 27 in 1997, it said. ''As congestion builds up and vehicles slow down, emissions increase up to five times,'' it said on its Web site. Ratan Tata drove a white, jelly bean-shaped Nano to the podium of a room filled with more than 1,200 people to unveil the model. Media and officials of rival automakers were seated and standing all around the room, in the aisles, in front of the stage and to the side of the sitting area. Before that, Tata addressed the gathering through a projected video image, discussing why the car was developed and cracking jokes about opposition by environmentalists and politicians who opposed the purchase of land for the car's factory in West Bengal state. The car has four doors, a single long windshield wiper, one side-view mirror on the driver's side and a manual 4-speed transmission. The car has been tested up to a top speed of 105 kilometers an hour, Tata said. Tata said he was inspired to develop the car when he saw a family on a scooter and then thought of building an automobile that was all-weather safe, fuel-efficient and affordable. Almost 500 engineers worked on the project in the past four years. The Nano is the first new design from Tata since it unveiled the Indica in January 1998 as India's first locally designed car. The new model may exceed the Indica in popularity, said R.K. Gupta, who manages $150 million as managing director of Credit Capital Asset Management in New Delhi and is planning to buy more shares of the automaker. ''The car could spur even an office clerk to dream of owning a car,'' Gupta said.