The World's Cheapest Car Debuts in India

In New Delhi in the early 1970s, my family traveled by scooter in the classic, death-defying Indian fashion. My father would drive, with me, a toddler, standing on the floorboard in front of him and my mother seated pillion, cradling my infant sister in her arms. My father was a civil engineer and my mother a nurse, and in India at that time, cars for a young family were far out of reach.

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• The People vs. the People's Car

More than 30 years later, I recently listened to Ratan Tata, chairman of Tata Sons, the holding company for the sprawling Indian conglomerate Tata Group, describe a family just like mine as the inspiration for the Nano, the ultra-cheap "people's car" that the Tata Group company Tata Motors launched on March 23. "What sparked it off was riding in a car and looking at them and saying, Surely there's a safer way that these people can be transported," he recalls. (See the 12 most important cars of all time.)

Tata has told this story many times since Tata Motors started developing the Nano six years ago. The project began with an audacious promise: build a safe, road-worthy vehicle costing 100,000 rupees (about $2,000), so affordable that it could allow millions of people in the developing world to park their scooters. Competitors dismissed the idea as folly. The Maruti 800, the Nano's closest competition, sells for about twice as much. Yet Tata has been as good as his word. The Nano is going on sale on April 9 at 470 outlets across India at a factory price of 100,000 rupees, not including taxes and transport costs. Within a few years, Nanos could also be available in Europe and the U.S.

The debut of the world's least expensive car comes at a time when the entire auto industry is in crisis. Demand for vehicles has plunged with the global recession, hobbling two of Detroit's giants, GM and Chrysler. Even Toyota, the model of a modern car company, is facing its first operating loss in decades. Tata Motors, India's largest automaker, is not immune. Sales of its commercial vehicles and cars have slumped, and debt from the company's purchase last year of luxury brands Jaguar and Land Rover is weighing on Tata Motors' balance sheet. Tata argues that the Nano is exactly the right car for these difficult times. "If I had conceived a million-dollar supercar today, I think you'd have every reason to question whether that's the right product at the right time in the planet that we are living in," Tata told TIME during a March 5 interview. "What has happened in the changing global economic situation reinforces, if nothing else, the fact that a low-cost car has a place." (See the 50 worst cars of all time.)

Yet the path that Tata Motors has followed to bring the Nano from sketchpad to showroom may prove to be much more important than its price tag. The company's engineers and parts suppliers started from scratch, rethinking every component to minimize cost and weight without sacrificing basic performance, comfort and style. As battered carmakers search for new business models to adapt to shifting, shrinking consumer demand, the Nano may point the way to the future — one that will likely revolve around smaller, more fuel-efficient and more cheaply produced vehicles. (See pictures of the Nano.)

The Quest to Get More from Less
The Nano is about as basic as transportation gets. It rolls on tiny 12-in. wheels, the tires have no inner tubes, the windshield has just a single wiper and drivers must make do with one side mirror. But it's not simply a stripped-down car. The shell was designed to be rigid with less material, and the body panels are made out of Japanese and Korean steel, giving the exterior a high-gloss look and feel. Delphi designed a streamlined instrument cluster that weighs just 14 oz. (400 g), compared to 2.2 lb. (1 kg) for the models it sells in North America and Europe. These and dozens of other refinements yield a car that weighs just 1,322 lb. (600 kg), less than half the weight of a Honda Accord. Reducing weight helps make the most of the Tata Motors – designed two-cylinder engine, which is bolted in the rear (like the classic people's car, the Volkswagen Beetle) and can power the Nano to a top speed of about 62 m.p.h. (100 km/h) in 23 seconds. Fuel economy is excellent: about 56 miles per gallon (24 km/L), better than a Prius, Toyota's hybrid sedan. (Read "India's Top Automaker, Tata Motors, Hits a Rough Patch.")

The car, which has four doors and seats four adults, doesn't feel like a lightweight on the road. I drove one on an empty test track at Tata Motors' main plant in the western Indian city of Pune and found that, while the interior is spartan, the Nano handles as well as any of the other low-end minicars available in India. The brakes lack feel and there's little storage space, but the car turned heads. Our photographer drove a bright yellow Nano — this one fully equipped with air-conditioning — through the highways, cobbled avenues and side streets of Pune. People swerved and tailgated to get a closer look, waving and shouting, "Hey, Nano!" as the car passed. When we stopped, a crowd immediately gathered. "It looks very appealing to the eye," says Bhagwat Pulsandar, 25, a Pune law student. "Possessing a car is a status symbol," says Rajib Das, 30, a shopkeeper in Sukantonagar, West Bengal, who says he wants to be the first in his village to own a Nano. "Who wouldn't want to rise in life?" (See pictures of muscle cars.)

The Margins Are Small, Too
Not much marketing will be needed to sell the Nano to aspiring Indians like the ones I met in Pune. Indians buy about 1.4 million cars and 7 million two-wheelers a year. Even if the Nano initially grabs just a fraction of this market, as Tata executives expect, demand will outstrip the current annual production capacity of 45,000 cars — meaning there will likely be long waiting lists and disappointed customers. But Tata Motors can't make more Nanos due to a controversy over construction of what was to be the Nano's main factory in Singur in the state of West Bengal. Last year, protests over people who were displaced from their farmland by the plant turned violent. The company was forced to abandon Singur and shift production to four existing facilities in other cities, a disruption that delayed the launch by several months. A new plant in business-friendly Gujarat will be ready at the end of 2010 with an annual capacity of 250,000, expandable to 500,000.