WORLD'S CHEAPEST CAR IS LAUNCHED!

The Tata Nano, the world's cheapest car, is being launched in India.

Costing just 100,000 rupees ($1,979; £1,366), the Nano is being launched in Mumbai later, before going on sale across India over the next 10 days.

Tata hopes the 10 feet (3 metre) long, five-seater car will be cheap enough to encourage millions of Indians to trade up from their motorcycles.

Car industry analysts estimate it will take five or six years for Tata to start to make a profit from the Nano.

The four-door Nano has a 33bhp, 624cc engine at the rear.

Inside the tiny Tata Nano (first broadcast 2008)

The basic model has no airbags, air conditioning, radio, or power steering. However, more luxurious versions will be available.

A slightly bigger European version, the Nano Europa is due to follow in 2011, and is expected to cost nearer to £4,000.

Analysts said that if the car proves an immediate hit in its home market, Tata may struggle to meet demand.

This is because the main Nano factory in the western state of Gujarat, which will be able to build 250,000 cars a year, is not due to open until next year.

In the meantime, Tata will only be able to build about 50,000 Nanos at its existing plants.

The delay happened when Tata had to abandon plans to build the Nano in a new plant in the eastern state of West Bengal due to a row over land acquired from farmers.

This caused the launch of the Nano to be put back by six months.

Even if Tata can sell 250,000 models a year, it will add only 3% to the firm's revenues, says Vaishali Jajoo, auto analyst at Mumbai's Angel Broking.

I want to be able to take my wife out for a drive in a car - my own car Indian chauffeur Gopal Pandurang World's cheapest car hits Indian market

"That doesn't make a significant difference to the top line," he said.

"And for the bottom line, it will take five to six years to break even."

Yet with seven million motorcycles sold last year in India, Tata is eying a huge marketplace for the Nano.

Like almost all global carmakers, Tata has seen sales fall as the global economic downturn has continued.

The firm made a 2.63bn rupees loss for three months between October and December.

In addition, Tata is struggling to refinance the remaining £2bn of its £3bn loan it took out to buy the Jaguar and Land Rover brands from Ford in June of last year.
BBC NEWS REPORT.