Thinking Small: The $2,230 Tata Nano Goes on Sale in India

The tiny, $2,230 Tata Nano “People’s Car” was unveiled this week at Mumbai’s Taj Mahal Hotel, the same stately and venerable edifice, near the Gateway to India arch, which was horrendously invaded by terrorists last November. It was perhaps not the best setting to emphasize India’s stability, since Tata itself faced disquieting landowner unrest that required it to abandon the almost finished Nano factory it built in West Bengal. (It’s now in Gujarat.)

Tata Motors’ share price jumped eight percent when the car was introduced March 23.

As someone who spent two years living in what was then Bombay, it is easy not only to envision hordes of 50-mpg Nanos plying the impossibly busy streets there, but also to imagine it as a really affordable world car on a planet returning to expensive oil. Even with cheap gas prices, that ultra-low purchase price is going to be very attractive for first-time car buyers, whether in Beijing or Boulder (where it could be pushed into service as a non-highway neighborhood runabout). It’s perfect for the narrow streets and high gas prices of Europe, where it’s headed in two years.

For many years, India’s car market was so controlled that a rebadged Morris Series III was built and sold for more than 50 years as the Hindustan Ambassador. But now you can buy a huge range of Indian, Korean and Japanese cars. Sales doubled in India between 2001-2002 and 2005-2006, and South Korea has been upset as the number three car market in Asia.

The base Nano is Spartan indeed. You pay extra for power steering and brakes, and forget about luxuries like a radio—which isn’t even an option. The 623-cc engine has only two cylinders and produces 30 horsepower. Top speed is said to be 65 mph, but owners are unlikely to maintain that heady speed for long. Fuel economy is variously reported from 50 to 60 mpg, but there’s no Indian Fueleconomy.gov to give us definitive figures. A poll in the India Times indicates that early buyers will be young and predominately male.

Tata has an interesting approach to choosing its first customers. People can pay $6 next month for a place in line, and 100,000 will be chosen to actually take delivery of cars. The first Nanos will be in showrooms in July. Those cars will be built not in Gujarat but at other Tata factories, because it may be early 2010 before the dedicated plant is completed.

Tata has been through some growing pains. It drew world attention by buying Jaguar and Land Rover from Ford for $2.3 billion a year ago, but the domestic market has been buffeted by the same credit and recession issues as the rest of the world. Still, a somewhat more expensive three-cylinder Nano Europa with airbags and, gasp, leather seats, is on track for 2011. European safety standards could be a problem. The U.S.—and the rest of the world—will take a little longer.