Tata unveils the latest in cheap Nano technology

TATA Motors Ltd, India's largest truck maker, unveiled the country's cheapest car, the Nano, yesterday, aiming to convince the nation's motorbike riders to trade up to four wheels.

Ratan Tata, 70, the company's chairman, displayed the car at the Delhi auto show. The company plans to sell the car for about 100,000 rupees (US$2,545), or half as much as the next cheapest model.

Tata, lagging behind Suzuki Motor Corp in Indian sales, will beat Renault SA in the race to sell cut-rate cars in a nation of 45 million two-wheelers where it's common to see a family of four on a motorbike. The car could help sales surge in India, set to be the world's fastest-growing major auto market till 2011, even as environmentalists raise concerns of pollution and traffic.

"It's a big, big bet by Tata," Amit Kasat, a Mumbai-based analyst at Motilal Oswal Securities Ltd, who recommends investors buy Tata's stock, told Bloomberg News. "The automotive world will be keenly watching how it plays out so that car companies can make their own adaptations for similar-priced cars."

The car will cost almost half as much as Suzuki Motor Corp's Maruti 800, the cheapest car now on the market. Almost seven motorcycles are sold for every car in India. The World Bank estimates almost half of the nation of 1.1 billion people live on less than US$2 a day.

Per capita income in India has doubled since 2000. India's economy has grown at nine percent a year since 2005, making it the world's fastest-growing major economy after China.

With oil rising to US$100 a barrel and pushing up fuel costs, auto makers must improve fuel-efficiency and Tata's car may only be a starting point, said A.S. Thiyaga Rajan, who manages US$250 million as the 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, France's second-largest car maker, is in talks with Bajaj Auto Ltd to build cars that may cost about US$3,000 and Renault would eventually export such vehicles to the United States for US$5,000, Carlos Ghosn, the company's head said on October 26.

The four-door Nano, marketed as "the People's Car," will have an engine at the rear and be powered by a 30-horsepower engine, Tata wrote in the company's annual report in June 2006. It will have four to five seats and "will be extremely attractive to the Indian consumer, particularly the younger families," Tata wrote.

Tata's car could "jam cities" and raise pollution, according to the Center 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.

The car will be the first new design from the Mumbai-based company since it unveiled the Indica in January 1998 as India's first locally designed car.