Tata's Nano mini car could change the auto market

In the 1960s, the Volkswagen Beetle was looked upon with scorn by Detroit as a fly on the hood of the real car industry. Few anticipated the change that it would bring, as a generation of boomers jumped at the chance to buy a new car for under $1,600, far less than Ford's cheapest offering, the $2,200 Comet. Within a few years, the Big Four were forced to bring out their own compacts, such as the reviled rust magnet, the Chevy Vega.

Now, a large Indian car manufacturer, the Tata Group (TTM), is pushing the same envelope, aiming to blanket the world with a $2,000 car, the Tata Nano. That's right -- two grand, about the cost of a high-quality bicycle. The first Nanos rolled off the production line earlier this month.

Industry journalists seemed rather impressed with what Tata has accomplished at this price point. The two-cylinder motor reportedly provides plenty of horsepower for the flyweight (1,400 pound) car. And while the base model lacks the niceties Americans have come to consider essential, the LX model will include A/C, power windows and brakes.

As is the case with many cars built overseas but not in the U.S., the Nano will need to be beefed up for safety and pollution control before it can be marketed here. However, starting with a base model of $2,000, Tata has room to do a great deal of enhancing and still bring in a product that could blow the doors off the bottom-bracket car market. If the recession continues or $4 gas returns, the Nano's chances would only be improved. In India, demand is already so great that Tata plans to allocate the first 100,000 by lottery.

If I were one of the Big Three, I'd be calling Tata to set up a meeting. The timing is right; Tata recently shuttered a $292 million plant that was to build the Nano after facing relentless protests by local farmers angry about the appropriation of their land, and the company is deep into the raw materials business, which has tanked recently. It also recently acquired Jaguar Land Rover, which has severely stretched its finances. With a few billion of their federal handout bucks, perhaps GM or Ford could take a position in the Nano.

Or end up chasing it, just like they did the Beetle.

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