Everyone knows about Ratan Tata’s promise to sell the Nano for $2500, but that might not last very long. Commodity prices are wreaking havoc on the profit margin for the world’s cheapest new car.
Prices for steel and other critical raw materials have risen to nearly 23 percent of the Nano’s price. Without increasing the price, Tata will not be able to make a profit on the cars. Analysts say the Nano’s price will have to increase after the car launches. Right now the cheapest car in India sells for $4300, so Tata could raise prices a little and still be the cheapest new car by $1000 or more.