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Tata Nano likely to lose much hyped Rs 1 lakh price tag
Published on 14 Mar. 2010 10:55 PM IST
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Tata Nano was launched with great fanfare as a 100,000-rupee (2,200-dollar) vehicle -- a round number that neatly encapsulated its status as the world’s cheapest car. But analysts say parent group Tata and its chairman Ratan Tata will struggle to keep the jellybean-shaped vehicle on sale at this level due to the rising costs of raw materials, labour and new higher taxes, stated Economic Times. Described as India’s “People’s Car,” the Nano is pitched at the country’s aspiring middle-classes, many of whom currently travel on two wheels but are looking to upgrade. “The Nano is Ratan Tata’s dream project. But as costs rise, the Nano will not remain a 100,000-rupee car,” said Vaishali Jajoo, from Mumbai-based Angel Broking. Tata faces the same problems as other car manufacturers, such as Japan-owned Maruti Suzuki and its rival Hyundai Motors, which have hiked their prices this year. Steel in most forms has seen an average price rise of 25 percent since April 2009, Jajoo said, while the prices of tyres and auto accessories are rising as demand for copper, aluminium, plastics and rubber picks up. The increase in commodity prices can be attributed to rising global demand following the end of the financial crisis and deep recessions in developed countries, analysts say. Tata Motors has guaranteed that the first 100,000 cars will be delivered “price protected” to owners, which means they get the vehicle at the promised price, regardless of rising costs. When a second round of bookings opens -- seen as likely in the last quarter of the year -- the cost of an LX could rise to nearly 200,000 rupees, while the basic model could be about 130,000, analysts say. Tata Motors was coy on a possible price rise. The Nano has sparked a race to create other ultra-low-cost cars for the Indian and other emerging markets. India and its 1.2-billion-strong population is a huge draw because of the low number of car owners. The basic Nano is on average about 1,300 dollars cheaper than its nearest rivals, the Maruti five-seater Omni at 200,000 rupees and the Maruti-800 at 210,000 rupees.

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