Cars

worlds cheapest car, is threatening to be a commercial properly as surging mad material personifys sputter its low-cost business model, according to industry insiders. Analysts and rival manufacturers foretell Tata, the conglomerate behind the Nano, to suffer heavy losses on the car as its promise to sell a canonical model for only 100,000 rupees (£1,250) - a price calculated to influence Indias middle classes away from their motorcycles - proves unexpectedly costly. Ratan Tata, the chairman of Tata, has admitted that he faces a dilemma. If we pass on all costs to the consumer, it allow affect demand, and if we dont, it will affect margins, he told investors recently. The economics underpinning the Nano, which is due to go on sale this autumn, make it curiously vulnerable to commodity market moves. Since Tata began to develop the Nano in 2003, raw material costs exact risen from close 13 per cent to about 23 per cent of its price forward taxes, according to an estimate by Global Insight, the consultancy. By contrast, the cost of raw materials account for about 7 per cent of the amount American car - or about $1,600 (£815), up from about $800 five years ago.

RELATED LINKS Renault-Nissan and Bajaj take on Tatas Nano Tatas littler car makes big impact Ian Fletcher, of Global Insight, said: I cant see the 100,000 rupee price being maintained for more than three months, largely to let Ratan Tata view as his price promise, before the company raises it. Potential Indian buyers atomic number 18 also facing interest-rate rises, which have made financing packages dearer, and increases in fuel costs, making motorbike mileage figures more attractive(a) than the Nanos 50 miles per gallon. Poor Nano sales may force a rethink across the industry. With oil prices at historic highs, carmakers have drawn up plans to follow Tatas lead by tar earning exploitation markets with a new generation of cheap runabouts. Within eightsome years, 100million households in countries such as India and China will... If you want to get a full essay, order it on our website: Orderessay

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