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World's cheapest car goes on sale World's cheapest car is launched
(about 2 hours later)
India's Tata Motors is due to launch its extra-cheap 10 feet (3 metres) long Nano car in Mumbai, selling for 100,000 rupees or $1,979 (£1,366). The Tata Nano, the world's cheapest car, is being launched in India.
It will enable poorer citizens in developing countries to move to four wheels for the first time. Costing just 100,000 rupees ($1,979; £1,366), the Nano is being launched in Mumbai later, before going on sale across India over the next 10 days.
The four-door five-seater car has a 33bhp, 624cc engine at the rear. It has no airbags, air conditioning, radio, or power steering. Tata hopes the 10 feet (3 metre) long, five-seater car will be cheap enough to encourage millions of Indians to trade up from their motorcycles.
It may not be enough to revive Tata Motors - hit by debt and falling sales. Car industry analysts estimate it will take five or six years for Tata to start to make a profit from the Nano.
The firm made a 2.63bn rupees loss for the October to December quarter. Factory row
Production issues The four-door Nano has a 33bhp, 624cc engine at the rear.
The company has also hit difficulty in its quest to refinance the remaining $2bn of its $3bn loan taken out to buy the Jaguar and Land Rover brands from Ford Motor in June.
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Inside the tiny Tata Nano (first broadcast 2008)Inside the tiny Tata Nano (first broadcast 2008)
The carmaker has been hit by the global downturn, which has knocked the spending power of the Indian economy and also made it harder for people to get loans to buy new cars. The basic model has no airbags, air conditioning, radio, or power steering. However, more luxurious versions will be available.
I want to be able to take my wife out for a drive in a car - my own car Indian chauffeur Gopal Pandurang class="" href="/1/hi/business/7954979.stm">World's cheapest car hits Indian market In addition, the launch has come six months late - it was due in October 2008 - following a row about where the car should be built. A slightly bigger European version, the Nano Europa is due to follow in 2011, and is expected to cost nearer to £4,000.
Tata pulled out of its factory in West Bengal in a row over land acquired from farmers, and instead moved production to the western state of Gujarat. Analysts said that if the car proves an immediate hit in its home market, Tata may struggle to meet demand.
The new factory will not be ready for another year and until then Tata is to make a reduced number of Nanos at its other Indian factories. This is because the main Nano factory in the western state of Gujarat, which will be able to build 250,000 cars a year, is not due to open until next year.
In the meantime, Tata will only be able to build about 50,000 Nanos at its existing plants.
The delay happened when Tata had to abandon plans to build the Nano in a new plant in the eastern state of West Bengal due to a row over land acquired from farmers.
This caused the launch of the Nano to be put back by six months.
Quarterly loss
Even if Tata can sell 250,000 models a year, it will add only 3% to the firm's revenues, says Vaishali Jajoo, auto analyst at Mumbai's Angel Broking.Even if Tata can sell 250,000 models a year, it will add only 3% to the firm's revenues, says Vaishali Jajoo, auto analyst at Mumbai's Angel Broking.
"That doesn't make a significant difference to the top line," he said. "And for the bottom line, it will take five to six years to break even." I want to be able to take my wife out for a drive in a car - my own car Indian chauffeur Gopal Pandurang class="" href="/1/hi/business/7954979.stm">World's cheapest car hits Indian market
"That doesn't make a significant difference to the top line," he said.
"And for the bottom line, it will take five to six years to break even."
Yet with seven million motorcycles sold last year in India, Tata is eying a huge marketplace for the Nano.
Like almost all global carmakers, Tata has seen sales fall as the global economic downturn has continued.
The firm made a 2.63bn rupees loss for three months between October and December.
In addition, Tata is struggling to refinance the remaining £2bn of its £3bn loan it took out to buy the Jaguar and Land Rover brands from Ford in June of last year.