India’s Tata Motors unveils $2,500 car, bringing ownership within reach of millions

NEW DELHI – For millions of people in the developing world, Tata Motor’s new $2,500 four-door subcompact – the world’s cheapest car – may yield a transportation revolution that has as great an impact as Henry Ford’s Model T, which rolled off an assembly line one century ago.\nThe potential impact of Tata’s Nano has given environmentalists nightmares, with visions of the tiny cars clogging India’s already-choked roads and collectively spewing millions of tons of carbon dioxide into the air.\nIndustry analysts, however, say the car may soon deliver to India and the rest of the developing world unprecedented mobility.\n“It is a potentially gigantic development if it delivers what has been promised,” said John Casesa, managing partner for the Casesa Shapiro Group, a New York-based auto industry financial advisory firm.\n“I think there is immense unmet demand for a vehicle of this type because it effectively eliminates the great leap currently required to go from a two-wheel to a four-wheel vehicle,” Casesa said. “They are creating something that has never existed before, the utility of a car with the affordability of a motorcycle.”\nThe basic model, expected to roll of assembly lines later this year, will sell for 100,000 rupees, or about $2,500, but analysts estimate customers could pay 20 percent to 30 percent more to cover taxes, delivery and other charges.\nCompany chairman Ratan Tata, who introduced the new car at India’s main auto show, has long promised a $2,500 “People’s Car” for India – a country of some 1.1 billion where only seven of every 1,000 people own a car. That vow has been much-derided by the global industry, which said it would be impossible without sacrificing safety and quality.\n“A promise is a promise,” Tata told the crowd after driving onstage stage in a white, luxury edition Nano, his head nearly touching the roof. Four company executives emerged from another. Tata says the Nano can sit five.\nThe company will not say how the price was kept so low on the basic version and won’t say how much the luxury Nano will cost until it hits showrooms toward the end of this year. The company also refused to let reporters sit in the car, let alone drive it.\nBut the basic version is austere: There’s no radio, passenger-side mirror, central locking or power steering and only one windshield wiper. Air conditioning that would spare motorists the brutal Indian summer is available only in deluxe models.\nThe Nano’s appeal, though, is not its pedigree but its price – targeting people moving up from the lower ends of India’s transportation spectrum, where two-wheeled scooters selling for as little as $900 are often crammed with entire families.\nIn terms of performance, it doesn’t offer much more than the Model T. The Nano has a two-cylinder 0.6 liter gasoline engine with 33 horsepower, giving it a top speed of about 60 mph, according to Tata. It gets 50 miles per gallon.\nAnalysts believe the Nano could transform the auto industry, forcing manufacturers to lower prices, and perhaps find cheaper ways to sell cars than in sprawling showrooms. French auto maker Renault SA and its Japanese partner, Nissan Motor Co., are trying to find ways to sell a compact car for less than $3,000.\n“Most of the other carmakers are watching this development very closely,” said S. Ramnath, an auto analyst at Mumbai-based brokerage firm SSK Securities Ltd.\nFor now, the car will be sold only in India, but Tata said it hopes to export it to developing nations across Asia, Latin America and Africa in two or three years.\nTata initially plans to manufacture some 250,000 Nanos per year. That would be about a quarter of all cars sold in India last year.