Tata struggling to keep a $2,500 price tag for Nano

Tata made noise in January when it unveiled the Nano and said that it plans to sell the car for a wholesale price of $2,500 per unit. However with the price of steel up by 50 percent, Tata Motors is having difficulty keeping cost down on the inexpensive Nano city car.

Tata is asking its suppliers to share the rise in cost. According to four suppliers, the Indian auto maker has a pricing model in which it can pay less for parts as volume increases. The four suppliers said that the price adjustments requested by Tata were fair.

The Nano is powered by a 33-hp engine mated with a rear-wheel-drive architecture and averages a fuel-economy of 52/61mpg (city/highway). Tata will offer the Nano in three different variants including one standard and two deluxe variants. Initial production is targeted at 250,000 units per year.

Source: Automotive News (Subscription Required)