Tata to keep the cost of Nano at Rs. 1 lakh

Tata Motors has set up a separate team at its plant in Pune to examine ways to cut the manufacturing costs of the Nano. The small car which is scheduled for a launch in October will come at an ex-showroom price of Rs. 1 lakh.

At present, the Nano's ex-factory price is Rs. 1 lakh, with transport costs and value-added tax the ex-showroom price comes to Rs. 1.2- Rs. 1.3 lakh.

As reported by Business Standard, according to experts, the company will either look at better price negotiations with component suppliers or through very minor re-engineering on the basic model.

Tata Motors has been able to reduce the cost of the car by making things smaller and lighter, doing away with superficial parts and changing material wherever possible.

For instance, the 623 cc petrol engine was made of aluminum instead of cast iron, saving weight and cost. The engine has also been placed at the rear of the car, putting less pressure on steering systems.

Tata Motors intends to open bookings for the car three months from now.

The company plans to produce 2,50,000 Nano's in the first phase and add 1,00,000 in the second phase.