The five-door hatchback that costs just Rs 100,000 ($2,500), making it the world’s cheapest, was unveiled in January this year at the Auto Expo here.

Nano would be among Tata Motors’ exhibits at the show, a company spokesperson said here.

Sales of Nano, nicknamed the people’s car for its affordable pricing that will make four-wheelers available to millions of middle-class people who hitherto rode two-wheelers, is expected to start in the second half of this year.

Although the car has its share of critics, it has undeniably put India on the global automotive map and has triggered a race among leading car makers to match the Nano price-point. Already, car manufacturers Renault and Nissan are eyeing a $3000 car.

The Nano, which Tata Motors has said meets all safety and emission norms, will share the limelight with top marques from around the world that are expected at the show. This year’s edition of the Geneva Motor Show will mark the 11th year of participation for Tata Motors.

The Nano has already driven these companies to look beyond the two-wheeler market, which has lately shown a huge slowdown.

Banking officials say that a sizeable segment of the 6.5 million (sales as of last financial year) strong motorcycle buyers are expected to shift to the Nano.

The comparable financing structure for a premium two-wheeler forces you to pay more every month through it is for a shorter period of time. For instance, a Bajaj Pulsar 220 is sold at Rs 92,675 with an equated monthly installment (EMI) of Rs 2200 for a period of three years.

Banks such as ICICI Bank, India’s largest auto financier, is charging an interest rate of 21-22 per cent on a two-wheeler loan with a down payment of 40 per cent of the total cost and 12.5 per cent on a car loan.

ICICI Bank is looking at unveiling a similar ‘consumer friendly’ financing scheme for the Nano. N R Narayanan, head-vehicle loans, ICICI Bank, said, “We will come out with special schemes for the Nano as huge volumes are involved. We are yet to make a proper financing package as it is still very early. But we will look to grow.”

Concurrently, an executive from the State Bank of India said, “There will be attractive schemes for the Nano once the booking starts in June. We will announce plans well before that date. Interest rates and tenures will be the selling points of our package.”

It goes without saying that the directive from Reserve Bank of India (RBI) will be crucial. “Although many banks would come out with attractive financing offers, a lot will depend on market situation and risks involved…but we are talking of huge volumes and many smaller banks will look to grab the opportunity to build a brand through attractive schemes”, said a banking executive.

According to experts, banks will provide packages especially in the non-metro regions where the car will become a hot buy.

The car may not be a good idea for the clogged urban roads of Mumbai, Bangalore or Delhi, but it is likely to become a hot seller in cities such as Kolhapur, Lucknow and Ahmedabad. An interest rate of Rs 1,199 can drive many probable two-wheeler buyers to consider the Nano,” said a Mumbai-based auto analyst.

Tata Motors’ own finance subsidiary, Tata Motors Finance, will also finance the car. The company is, however, discreet about its plans.

Tata Motors is looking at producing about 270,000 units annually to begin with and this will be hiked to 350,000 gradually. The car will be up for sale by October this year.

Nano has been priced at Rs 1 lakh after taking into consideration an excise duty of 16%. A 4% reduction will offer Tata Motors more headroom to hold on to the Rs 1 lakh price point in case of rise of inputs, like steel, aluminium and plastic parts.

However, Tata Motors company spokesperson said that it was too premature to comment whether Tata Motors will pass on the benefit of reduction in excise duty to buyers as it has done for other small cars in its stable. “This car is made to cost. The cost has been decided first and the design and engineering followed to fit to the price. Reduction in excise duty will enable the company to absorb price hikes of input materials and components through the margin that is now created as result of the reduction. Input costs for automobiles have in fact risen considerably in the past one year. For example, price of steel has risen by at least 15% over the last one year,” said an auto expert.

Interestingly, Tata Motors on Friday announced that it will reduce prices of its small cars and commercial vehicles, including buses, bus chassis and bus body, in view of the reduction of excise duties announced in the Union Budget.

This includes the Indica range of vehicles, except the Indica Zeta GLX and Indigo Compact sedan. According to the business roadmap prepared by the Tata Motors, the Singur plant will initially manufacture 2.5 lakh cars per year, which will be scaled up to 3.5 lakh units over a period of time. The company invested Rs 1,000 crore in the plant.

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Tata Nano – The promise accomplished  

Nissan plans to buy 50,000 A-Star compact cars from its rival Maruti Suzuki and export to markets in Europe. It is also learnt that Tata Motors is talking to dealers to launch its Nano, the ultra low-cost car, in the western markets. Car makers prefer sourcing cars from India since operations are wholly-owned compared to China, enabling low-cost production of components.

Korean car maker Hyundai exports 40% of its small car production, primarily i10 and Santro, which sells as Atos in 97 countries across the world. “Currently, India is a small car hub for Hyundai and we have a backlog of export orders too,” says Hyundai Motor India senior V-P Arvind Saxena. In a slow domestic market, the Korean car major can divert its small cars to western markets. The company is also expanding capacities at its Chennai plant.

The country’s largest car maker Maruti Suzuki currently exports Alto, M800, Omni, Wagon R and Zen Estilo to non-European markets such as Chile, UAE, Algeria and East Africa. The Japanese car maker which exported 53,000 units in 2007-08 will up it to 2-lakh units by 2010. “We had stopped exports to Europe and now we intend to start exporting the A-Star compact car to Europe by year-end,” a company official said.

Nissan too will make a small car in India and start exporting it to Latin American and African countries by 2010. Even while Tata Motors is receiving enquiries from other countries to set up Nano plants, the auto major is also understood to be sprucing up the low-cost car with fitments such as airbags, better interiors and engine options to market it in the overseas markets.

Tata Motors sources said the company might consider issuing licences to a particular car maker in offshore markets, who would manufacture Nano. While the near-term focus is India, international marketing will take place after a few years, company officials said. The Indian car market accounts for 71% of small cars while in China it accounts for 33%. In April-June, car exports were up 46% to 66,119 units.

Dealers in Mumbai said prices had fallen by 15 to 20 percent, particularly for many smaller used cars like the Maruti 800, Maruti Alto and Hyundai Santro, according to the Business Standard newspaper.

The Nano — a sporty, jellybean-shaped car that has a price tag of just 100,000 rupees (2,000 dollars) for the basic model — is to be launched next Monday and is being marketed as the affordable car for millions of Indians.It will appear in car showrooms from April.

The director of one of Mumbai’s largest used-car dealers, Fazulbhoy Motors, was quoted as saying that the drop in demand began when Tata Motors announced the Nano’s launch date.

“People are postponing purchases and there has been a lull in the market ever since,” said Arif Fazulbhoy.

The financial daily said the a 2007-made Maruti 800, which previously retailed at 145,000 rupees, was now selling for 125,000 rupees while a 2007 Maruti Zen Estilo was now 40,000 rupees cheaper at 260,000 rupees.

But Shubhabrata Saha, chief executive of Mahindra First Choice Wheels, said the launch of the Nano would largely impact smaller dealerships, which make up 80 percent of the country’s second-hand vehicle sector.

Prices and demand were holding among larger dealerships, which tend to offer authentication, warranties and sales data on second-hand vehicles, he added.

Dealers in Mumbai said prices had fallen by 15 to 20 percent, particularly for many smaller used cars like the Maruti 800, Maruti Alto and Hyundai Santro, according to the Business Standard newspaper.

The Nano — a sporty, jellybean-shaped car that has a price tag of just 100,000 rupees (2,000 dollars) for the basic model — is to be launched next Monday and is being marketed as the affordable car for millions of Indians.It will appear in car showrooms from April.

The director of one of Mumbai’s largest used-car dealers, Fazulbhoy Motors, was quoted as saying that the drop in demand began when Tata Motors announced the Nano’s launch date.

“People are postponing purchases and there has been a lull in the market ever since,” said Arif Fazulbhoy.

The financial daily said the a 2007-made Maruti 800, which previously retailed at 145,000 rupees, was now selling for 125,000 rupees while a 2007 Maruti Zen Estilo was now 40,000 rupees cheaper at 260,000 rupees.

But Shubhabrata Saha, chief executive of Mahindra First Choice Wheels, said the launch of the Nano would largely impact smaller dealerships, which make up 80 percent of the country’s second-hand vehicle sector.

Prices and demand were holding among larger dealerships, which tend to offer authentication, warranties and sales data on second-hand vehicles, he added.