Tata’s upcoming Nano microcar is being touted as the world’s most inexpensive passenger car, but rising steel prices are threatening the Nano’s bargain-basement $2,500 price tag. With steel prices shooting up 30 percent in the last quarter alone, Tata is now asking some suppliers to help absorb added costs in order to retain the Nano’s minuscule sticker price.
Tata has asked some suppliers to help with as much as 50 percent of the price hike, while others have agreed to contracts based on volume rather than one flat price — the latter a common business practice in India.
“There are different rates for if they buy 10,000 units or if they buy 25,000,” the CEO of a Delhi supplier told Automotive News. “That’s never happened in India, where we usually set prices for the next six months or the next year.”
Tata Motors’ parent company – Tata Group – also owns Tata Steel, which should help to keep steel prices under control. However, it remains unclear if Tata will be able to deliver the Nano to market with a price of $2,500.
