Tata Motors plans to launch the cheap Nano car in Europe in four years, the head of its compact car projects has told German magazine Focus.

"We will develop a successor model in four years, which will meet the Euro 5 emission regulations and the crash standards in Europe," Girish Wagh was quoted ahead of publication by Focus, according to the Economic Times of India.

The main target was to reduce the car's fuel consumption to three litres per 100 kilometres from five litres at present, Wagh told the magazine.

Tata Motors launched the $US2,500 (pretax) Nano last month and said the new four-seater would go on sale in India later this year.

Tata has said it will initially produce about 250,000 Nanos and expects eventual annual demand of 1m units but would focus on the home market for two to three years before considering exports to countries in Africa, Latin America and Southeast Asia, the paper noted.

It added that global car makers, initially sceptical that Tata could produce such a low-cost car, are now scurrying to make their own versions to meet the needs of cost-conscious consumers in emerging economies such as China, India and Russia.