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March 4, 2010

INDIA: Cheap Tata may soon not be so cheap

Tata has hinted its Nano, the world's cheapest car, may have its price hiked ahead of a new round of orders later this year.

Tata has hinted its Nano, the world’s cheapest car, may have its price hiked ahead of a new round of orders later this year.

The company said earlier this week it had promised to hold the price for the first batch of Nano buyers, hinting at a rise for new buyers when the order book is reopened. It did not divulge the exact amount of the price hike, The Hindustan Times reported.

“Deliveries to the first lot of customers should be over by December… prices of commodities and logistics have gone up, so we’ll look into the pricing of the car closer to the date of fresh bookings,” Tata vice-chairman Ravi Kant told the paper.

The Nano is currently manufactured on a temporary basis at Tata ‘s Pantnagar plant in Uttarakhand, which gets tax breaks as the region is a zero excise zone. Output was shifted there after Tata had to abandon an almost complete plant built for the new car after violent protests over land confiscation for the factory and an adjacent supplier park effectively halted operations there.

With production at a new ‘mother plant’ in Sanand, Gujarat, set to commence from April, increased tax could force the Nano price up.

“Pantnagar enjoys some tax sops which Sanand does not. Also, our suppliers transport components from far off areas to Uttarakhand, which increases logistic costs,” Prakash Telang, managing director of Tata ‘s India operations told The Hindustan Times . “It is logical (to expect an increase), but we have not arrived at a final decision yet.”

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