Tata Motors Suspends Work on Nano

With a great deal of fanfare, Tata Motors Ltd., India’s largest truck maker, announced in January the development of what it touted as the world’s cheapest car, the Nano, priced at 100,000 rupees, or $2,500.

The company’s chairman said he was inspired to develop the car when he saw a family on a scooter, and then thought of building an automobile that was all-weather, safe, fuel-efficient and affordable. MTD discussed this event and concluded that, based on cars already produced in China, a car with the same features as the Nano could actually be produced even more inexpensively if it were produced here. We also concluded that the reason no Chinese company had set out to make the world’s cheapest car is that there is little demand among Chinese consumers for a car with such skimpy features.

It now seems that consumers in India will have to wait to buy their Nano. Tata Motors announced yesterday that they have suspended work indefinitely at the factory building the car, following increasingly violent protests by farmers demanding the return of their land. Despite having poured $350 million into a plant which had been scheduled to roll out the first Nano in October, Tata has suspended production of the car indefinitely. Local farmers have staged protests for nearly two years, complaining they didn’t receive sufficient compensation for the land where the factory was built. According to a company spokesman, “The situation around the Nano plant continues to be hostile and intimidating. There is no way this plant could operate efficiently unless the environment became congenial and supportive of the project.”

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