Indian automaker Tata Motors has released an ultra-cheap mini-car known as the Nano, but is six months behind schedule before the car has even been released for sale.
The new model is also not expected to deliver the rescue that the company needs to drag itself out of plummeting sales and high volumes of debt.
The new Nano model will cost about $US2050, measures just 3.1 metres long and has just one windshield wiper. The Nano also lacks air bags and antilock brakes, while the cheapest model lacks air conditioning, a radio and power steering.
The car will only be released in India, as it lacks certain safety features needed to allowed on Australian, European and American roads.
Tata Motors has not been immune to the troubles felt by its auto manufacturer counterparts in Detroit, declaring a $US54 million loss in the quarter ending 31 December.
It has also been attempting to refinance $2 billion of the $3 billion in loans used to purchase the Jaguar and Land Rover brands from Ford Motors last year.
The Nano model is also arriving half a year late due to protests from farmers and political opposition regarding land ownership, forcing the company to move its factory to a different city.
Tata has said that it will take a year to build the new factory, and has not yet released production volume estimates.
Vaishali Jajoo, analyst with brokering agency Angel Broking in Mumbai, claims the new cheapest car in the world will not be enough to save the company from its problems.
“It won’t solve the cashflow problem they are having right now,” he told Bloomberg. “They will have to take more debt.”
Jajoo claims that if the company sells 250,000 Nanos, which is over five times the amount expected by Indian auto industry analysts, it will only add 3% to total company revenue.
“That doesn’t make a significant difference to the top line. And for the bottom line, it will take five to six years to break even,” Jajoo said.
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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