Because of plant-construction problems, the cars are being built on temporary lines at Tata plants — a move that will increase costs but avoid a long delay in the Nano introduction. The Nano, powered by a two-cylinder engine, has gained global interest because Tata expects to sell it to dealers for about $2,500.
Tata was scheduled to start production at a plant in Singur, on India’s east coast, in the fourth quarter and build 100,000 in the first 12 months. But it was forced to relocate its $350 million investment in production lines and equipment from Singur after nearly 45,000 protesters ringed the site in August. Farmers and others protested against the illegal and unfair confiscation of land for the plant.
The controversy resulted in Tata Motors missing its launch goal. “It has become a matter of priority for there to be at least some Nanos available for sale as soon as possible,” said the operations executive, who asked not to be named because he was revealing information he was not authorized to share. “For those first few thousand vehicles, it’s very difficult to keep prices down, because the production lines will be temporary.”
It seems that Tata is struggling to inject money into this project and others. It is also apparent that suppliers are so far very unhappy due to the rising costs of steel and other materials used in car manufacturing. Having already used low quality material (e.g low quality copper in wiring causing electrical failures in Indica), consumers may now face even worse quality in Nano as first estimated by the experts.
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