Tata to Cease Nano Production in 2020

Tata Motors Ltd. will stop producing the Nano, touted as the world’s cheapest car when it debuted in India in 2008, next year.

Tata announced last July it would begin phasing out the car, citing the cost of bringing the Nano into compliance with India’s Stage IV emission standards that will take effect in April 2020.

The car was launched at a starting price of 100,000 rupees ($2,500). Hailed as a triumph of frugal engineering, the little hatchback was forecast to sell 1 million units per year to first-time buyers who were ready to trade in their motor bikes.

The car’s launch was marred by farmer unrest over the award of land in western India for the original Tata plant. The company was forced to build a replacement factory, designed to make 250,000 vehicles annually, on the other side of the country. The move delayed high-volume production for three years. By then, the hoped-for starting price of $1,900 had risen nearly 20%.

But the Nano was poorly equipped and plagued by highly publicized fires. Product improvements and a series of better-equipped models pushed the car’s price up to $4,100 by 2015.

The demand Tata predicted never materialized, and sales peaked at a mere 9,000 units in 2010. Analysts blame much of the hesitation on the onus that would-be buyers attached to the car’s cheap price. Last year Tata built only 518 of the cars, as monthly sales shrank to as few as 3.