Mumbai: Tata Motors Ltd, maker of the world’s cheapest car, opened a plant for the Nano model that will boost output amid rising demand for automobiles in the country.
Chairman Ratan Tata inaugurated the factory at Sanand in Gujarat on Wednesday. Tata had previously said the plant will have capacity to build 250,000 Nanos a year.
Higher production will help Tata clear a backlog of orders for the Nano and win customers from Maruti Suzuki India Ltd and Hyundai Motor Co., the country’s two largest car makers.
Renault SA is also working on an ultra-low cost model for India where demand for cars may more than double to three million annually by 2015, helped by economic expansion and rising incomes.
“More Nanos on the road is crucial to establish the brand as a car for the masses,” said Vaishali Jajoo, a Mumbai-based analyst at Angel Broking Ltd. “Exports of the Nano were always on the cards and this factory will help achieve that as well.”
Tata Motors received 206,703 orders for the Nano in the initial sales period in April 2009 and chose the first 100,000 customers for the 624cc model by lottery. That car, with one windshield wiper and no radio or air conditioning at the entry level, sells for Rs123,360 in New Delhi.
Deliveries of the Nano began in July, and the firm sold 33,875 cars through April, according to data from the Society of Indian Automobile Manufacturers.
“Our effort was to give people of India an affordable car,” Ratan Tata said in a speech on Wednesday. “We are giving people of India a chance for personal transport.”
Indians may buy as many as one million low-cost cars a year by 2016, according to CSM Worldwide Inc. Tata can account for at least half of that market with its first-mover advantage, according to Puneet Gupta, a New Delhi-based analyst of CSM.
Nissan Motor Co., Renault and Bajaj Auto Ltd are jointly developing a $3,000 car for showrooms in 2012. The car, one year behind schedule, would be produced at a plant in Maharashtra with a 400,000-vehicle capacity.
A dedicated factory for the Nano was delayed after the auto maker halted construction of a plant in Singur, West Bengal, because of violent protests by farmers demanding the return of land acquired for the site.
Tata abandoned the nearly completed facility in October 2008 and began building the Sanand facility on 445ha (1,100 acres). It can be expanded to make 500,000 vehicles a year and employ 10,000 people.