World's Cheapest Car Rolls Off Production Line at New Plant

Two years after Tata Motors abandoned its first-choice factory due to a violent land row, the Nano, rolled out of its new plant in western India on June 2.

The new plant in the western state of Gujarat was inaugurated by Tata Group chairman Ratan Tata and state chief minister Narendra Modi. "We will see the product of this state on the roads of India, giving the people of India a chance to have personal transport," Tata said at the opening ceremony.

Tata Motors had originally chosen Singur in West Bengal as the main plant to produce the Nano, but had to scrap the nearly complete factory in 2008 over a bitter land ownership dispute.

The Nano, which has so far sold a less-than-expected 35,000 units, has until now been made at various Tata factories elsewhere in India. The new plant in Gujarat has the capacity to manufacture 250,000 units annually, and aims to increase production to 500,000.

Deliveries from the new plant start later this month, but the company will also continue producing the Nano at a factory in the northern state of Uttarakhand to help clear the backlog of orders.

Launched with great fanfare last July, it costs as little as 100,000 rupees (US$2,150) and is pitched at India's aspiring middle classes, many of whom currently travel on two-wheelers.

Tata Motors is currently carrying out inspections of sold Nanos after owners reported fires in the car. But the company said the checks were "to allay owners' concerns" rather than a recall.

India, with its 1.2-billion-strong population, is a huge draw for carmakers across the world because of its low car ownership rates and rapidly expanding number of affluent consumers. Just 13 per 1,000 people own a car in India, compared with 550 per 1,000 in Germany and 495 in France.

The Nano has sparked a race to create other low-cost cars for the Indian and other emerging markets. Renault and its Nissan will launch the small Micra car in July this year to rival the Nano. Ford, Toyota and Honda are also poised to launch small cars in India in the next two years.