Steely woes for the Tata Nano’s Price

Tata Nano

Steel prices have been fluctuating for quite a while now and this is a major factor that could make the world’s cheapest car, the Tata Nano’s second batch costlier by a few tens of a thousand.

While Ratan Tata lived up to his promise of pricing the base version Tata Nano at not a rupee more than INR 1 Lakh, Ex-showroom, he also subsequently made it clear that the Tata Nano might see a price hike as and when the cost of production goes northward.

Tata Nano

Steel prices, one of the major raw material input in modern cars has seen wayward inflections in it’s price right from $399 a tonne from when the Tata Nano was first conceptualized in 2003 to about $800 per tonne now. This two fold increase in steel prices is eating into the already wafer thin margins with which the Tata Nano is being now produced by Tata Motors.

Hence, it is only natural that Tata Motors, which apparently is making almost nothing on the base version of the Tata Nano, will hike prices of the second batch of Tata Nanos.

Tata Nano

We’re anticipating a price hike of at least Rs. 10k – 15k on the second batch of the base versioned Tata Nanos. While this hike might not look like much, it certainly a bunch of a money that the man on the street would be hard pressed to muster for his family to make the seemingly giant leap from two wheels for four.

This is especially true if the Tata Nano will be bought on a car loan, which will ensure that any price hike when combined with the interest rate will radically impact monthly EMIs.