Costs rising for Tata's Nano

Posted by: Ian Rowley on July 18, 2008

With the October launch of Tata’s 100,000 rupee (about $2,400) Nano getting closer, expect the hype surrounding the world’s cheapest car to soon revisit January levels. Back then, the Nano’s debut in Delhi grabbed more headlines than any car at the North America International Auto Show in Detroit held the same month.

Still, one discussion Tata will probably want to avoid is how much the cheap car will cost to build. In recent weeks a slew of stories coming out of India suggest that costs are rising sharply. On July 7, Automotive News reported that Tata is (like all automakers) struggling with rising steel prices, which rose by about half in the last year. One possibility is that Tata Motors might receive discounts on the steel it buys from sibling company Tata Steel, although that sounds suspiciously like robbing Peter to pay Paul.

Meanwhile, in an interesting twist on cost cutting, on July 3, India’s Economic Times reported that India’s carmakers are cutting back on ad spends to offset rising input costs and warned that the Nano may be “launched without much fanfare.” Tata says that suggestions it is slashing the Nano ad budget are just speculation.

What isn’t speculation is that the new factory where the Nano will be built is costing more than hoped after flooding at the site during the rainy season. Tata managing director Ravi Kant told reporters on June 28 that the price of the plant had risen to 20 billion rupees ($470 million). That’s 18% higher than the projection back in January.

Here in Japan, where Suzuki (the biggest automaker in India) and Nissan (which is planning a cheap car of its own) are watching events carefully, local Japanese media also noted that trial runs at the plant are slated to begin either this month or next. That doesn’t leave much time to iron out any glitches ahead of an October launch. “At least half a year will be needed after the factory is completed (for production to get on track),” an anonymous official from one Japanese manufacturer told the Nihon Keizai newspaper.

Reader Comments

stevee0506

July 18, 2008 9:17 AM

I hope that TATA's Nano will not increase its price because its main attractiveness of this auto is because of its price....I think slashing the AD cost, i would say is the apt solution for compensating the price increase....... http://www.buyingadvice.com/auto-reviews.html

Sayantan

July 18, 2008 12:15 PM

The best way is to wait n watch... But I have my doubts when indica was launched.. tata created it big.. and when i tokk the indica out.. it was merely a car nithing g8 about it.. but now its wonderful.. so i have my doubts with tata nano...

stevee0506

July 22, 2008 1:13 PM

Don't worry about it...Nano would be fine and gr8....There will be steep increase in its sales...all because of its price tag it possess.......Keeping my figers crossed.....http://www.buyingadvice.com/

Jiten C Das

January 15, 2009 1:54 AM

Whatever it is, it will bring a revolution.Tata Nano may rather reduce traffic on Roads as many would like to take out Nano instead of His/Her bigger one within the town/city for day-to-day work.

Post a comment

 

About

Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

BW Mall - Sponsored Links

Buy a link now!