Ever since it was unveiled in India in January 2008, this $2200 car dubbed “the people’s car” has made quite a buzz .  Depending on who you talk to,  you are either going to hear this car is good for India or it is bad news for the world.  Here are several reasons why this car is good for India:

1)  Many Indians travel in two-wheelers taking their whole  family on board — it is not uncommon to see 3 persons or even 4 on  a scooter  or a motorbike in Indian roads.  The stated goal of the makers of Nano was to put the potential buyers of a two-wheeler on a four-wheeler instead.

It will definitely save many  from the inherent dangers of riding on a two-wheeler.

2) It is a green car, at least when it comes to fuel consumption.  It is certified by the Automotive Research Association of India as getting 56 miles to the gallon , making it the   highest fuel rating of any other  petrol-powered car on Indian roads. It will also be the least polluting car with a CO2 emmission of  101 gm/km.  According to Tata motors, the car emits 12 percent less carbon dioxide than two-wheelers made in India.

On the  flip-side,  Being cheap means it will be produced in a mass scale and within no time India’s already clogged  roads will be choked full with cars — creating a nightmare for everyone.

So What makes the car so cheap?

“The real secret to the car is weight,” says David Hudson, a British engineer at Tata Motors. “Because if you control weight everything else follows. Light weight cars need light weight brakes and light weight engines.”

Keeping the car a lean 600kg (1300 pounds) also cut down on the cost of raw materials and boosted its fuel efficiency, according to Hudson.

Now, whats in it for the rest of the world?

Well, with the world in a severe economic downturn and no recovery in sight, sudddenly a $2000 car has become very appealing to many in the west . Many also fear the price of oil will shoot back up high in a few years.

One mother in the US writes:

“With car prices so high, and the fear that any vehicle I get for my (nearly) 16 year old will end up piling as many friends as she can into my mini-van, I’m really digging this car. Too bad there’s no way to get one before she’s out of the house and gone.”

Tata motors have taken note of the interest generated by Nano in the US and it has announced there  will be one for the US markets available in 2012 but at $4000 price tag  due to improved safety and emission standards. Interestingly, the cheapeast cars currently available in the US are Nissan Versa and Hyundai Accent which sells for approximately $10,000 each.

Tata motors also announced  it will market a kitted version named  ‘Nano Europa’  in Europe in 2011. It also announced that an electric version of the Nano is also in the works.

Last week,  Tata Motors started taking orders from  Indians for the first batch of 100,000 cars, each potential buyer paying a deposit of around $1890, almost the full purchase price of the car.  Demand is expected to far exceed 100,000.  Tata Motors is expected to make use of the $200 million earned from the deposit towards paying off a $2 billion bridge loan it had during its purchase of Rover and Jaguar last year.  Tata’s credit rating has recently been downgraded by all major rating agencies for its lack of operating capital.

Although this car has been dubbed as “the people’s car”, a $2000 price tag is a very steep price to pay  for a lot of Indians  where 77% of people live on less than half a dollar a day and thats 836 million people.

So while this car will be an easy step-up for many potential two-wheeler buyers, it has a long way to go before it can be claimed as a  true “people’s car”.

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