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World's cheapest car goes on sale
India's Tata Motors will launch its extra-cheap 10 feet (3 metres) long Nano car in Mumbai on Monday, selling for 100,000 rupees or $1,979 (£1,366).

[Image: mrczr8.jpg]

It will enable poorer citizens in developing countries to move to four wheels for the first time.

The four-door five-seater car has a 33bhp, 624cc engine at the rear. It has no airbags, air conditioning, power steering, radio, or power steering.

It may not be enough to revive Tata Motors - hit by debt and falling sales.

The firm made a 2.63bn rupees loss for the October to December quarter.

Production issues

It has also hit difficulty in its quest to refinance the remaining $2bn of its $3bn loan taken out to buy the Jaguar and Land Rover brands from Ford Motor in June.

The carmaker has been hit by the global downturn, which has knocked the spending power of the Indian economy and also made it harder for people to get loans to buy new cars.

In addition, the launch has come six months late - it was due in October 2008 - following a row about where the car should be built.

Tata pulled out of its factory in West Bengal in a row over land acquired from farmers, and instead moved production to the western state of Gujarat.

The new factory will not be ready for another year and until then Tata is to make a reduced number of Nanos at its other Indian factories.

Even if Tata can sell 250,000 models a year, it will add only 3% to the firm's revenues, says Vaishali Jajoo, auto analyst at Mumbai's Angel Broking.

"That doesn't make a significant difference to the top line," he said. "And for the bottom line, it will take five to six years to break even."

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