Tuesday, March 24, 2009

The Nano, world's cheapest car, to hit Indian roads

While the cost of raw materials such as steel has changed a lot since the Nano was first proposed, and even since its unveiling, the company decided to hold the price for the first 100,000 cars and expects it to be profitable. 

Analysts said Tata may raise prices soon, but slim margins, initial capacity constraints and muted market sentiment mean that breakeven on the project will take 5-6 years.

"Scaling-up challenges are expected to be humungous," CRISIL Research said in a note, adding volumes of 200,000-500,000 units were needed in the medium term for the project to be viable.

Tata can currently produce about 60,000 Nanos a year until a 250,000-unit plant in Gujarat state comes onstream by end-2009.

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