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Inisight: It’s cheap, basic and a potential world-beater

It was the New Delhi Motor Show – and not Detroit – that hosted the launch of the most significant car of 2008. Possibly the decade, even.

The shows opened days apart, but for importance and imagination the new Tata Nano eclipsed everything on display in Motor City.

It isn’t much to look at; a sort of shrunken Daewoo Matiz with recycled pennies for wheels. Nor will it be thrilling to drive, with its 33bhp, 624cc rear-mounted two-cylinder engine, 65mph top speed and a barren specification that doesn’t even stretch to a radio.

But at £1,250 it is, of course, the cheapest car in the world, and cheapest by such a massive margin that it’s hard to predict just how significant it will be.

Its closest rival in India is the Maruti 800, based on a long-obsolete Suzuki Swift and more than twice the price. Bosch, which supplies parts for the Nano, estimates that by 2010 the ultra-low cost car market will have grown to 10 million a year. Others think it could be much, much bigger.

There are certainly hundreds of millions of people who previously could not afford a new car, but now can. Exhilarating for carmakers, terrifying for Greenpeace. Tata is a remarkable company. It is 150 years old, family-controlled and has a vast, bizarre assortment of activities. On paper it looks very old-economy; a vast, creaking conglomerate prime for buy-out and break-up. Instead, it thinks and acts like a spring-chicken start-up.

Chairman Ratan Tata decided he wanted to give ordinary Indians a better means of transport. It was, he says, a social mission.

The project became known as the one-lakh car, the Indian phrase for 100,000 and the price in rupees for which it was rumoured the car would be sold.

Not only has his company comprehensively re-imagined the car, but it has launched its new model with a professionalism that will reassure those at Jaguar and Land Rover who might soon have Ratan as their boss. We knew for years that the one-lakh car was coming, but hardly a single scoop picture or technical detail leaked before the car’s launch.

The car unveiled in Delhi looks far more normal than expected; rumours of a canvas roof and plastic seats were unfounded. More importantly – and impressively for such a big project – it launched the Nano exactly when it said it would, and at the promised price.

The launch wasn’t without controversy; the Indian government predicts car sales will treble to three million each year by 2015. Environmental campaigners responded predictably.

Tata says the Nano will return 50mpg, meet Euro IV emissions standards and be the cleanest car in India.

Tata’s rival Bajaj, which makes motorcycles and three-wheelers and has unveiled its own low-cost concept car, has questioned whether Tata can build the Nano profitably for 100,000 rupees, and whether this is the price consumers will pay; £1,250 is in fact likely to be the dealer cost, and Bajaj’s car will cost around 20% more when it goes on sale at the end of the decade.

Tata confirmed that more expensive variants with radios and air-conditioning will be available, and has suggested that these cars will provide the profit.

The established western carmakers might have missed the opportunity to build a truly cheap world car, but now that Tata has alerted them, they’re working fast to catch up. Fiat has grabbed the prime deal; its partnership with Tata, announced two years ago, will put the new car into production in its factories in China and South America, giving Tata a global reach.

Carlos Ghosn at Renault-Nissan is doing a similar deal with Bajaj. It could build its new car in China, South America and Africa, and Ghosn has even discussed selling it in the United States for £2,500.

Volkswagen and Toyota are working on their own low-cost cars for emerging markets, but neither is expected to be as cheap as those from India.

In the long term, if the Nano lives up to its hype, it might well turn out to be as significant as the Model T or the Beetle. In the short term, you might be wondering what benefit a company that builds cars for £1,250 can bring to Jaguar and Land Rover. The answer? Agility, imagination and focus – qualities Ford sometimes lacked. And, if the Nano starts to sell in the promised numbers, an almost unlimited bankroll.

#AM_ART_SPLIT#

The luxury version of the Tata Nano The standard Nano

ENGINE
The rear-mounted two-cylinder engine displaces just 624cc to produce 33bhp. There’s a single balancer shaft, catalytic converter and Bosch multi-point injection using technology from motorbike systems.

CONSTRUCTION
The chassis is made from steel, wrapped in steel and plastic panels to keep weight – and production costs – down. Contrary to the rumours, the windows are made from simple-to-produce glass.

DEVELOPMENT
Bosch developed the alternator, brakes and engine management systems in Asia to keep prices down. Simplicity and low cost were engineered in from the outset.

PERFORMANCE
The two-cylinder engine sends drive through a four-speed manual transmission. Full performance figures haven’t been revealed yet, but Ratan Tata claimed a top speed of 65mph.

REGULATIONS
Despite its back-to-basics construction, the Nano meets India’s frontal and off-set crash test regulations. Its tiny engine is frugal too; it averages 50mpg and meets Euro IV emissions regulations.

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