The relatively recent flurry of activity at India’s Tata Motors, along with a slowing economy and high gas prices, is hurting the price of its stock, with the company chairman concerned about the future outlook. The automaker made itself famous by its introduction of the world’s cheapest car, the Nano, and the recent purchase of the Jaguar and Land Rover brands from Ford .
It’s those two moves that are responsible for the lowest share prices in more than three years. The latest decision to raise prices of its commercial vehicles by 3 percent on Tuesday saw shares fall another 4.2 percent, adding up to a 45 percent loss in 2008.
Chairman Ratan Tata expressed concern yesterday in the company’s annual report, saying commercial vehicle sales will be down until next year, while the company tries to finish its Singur plant where the $2,500 Nano is to be assembled. The plant, previously estimated to cost 17 billion rupees (about $400 million) is now estimated to cost 20 billion (about $460 million), according to Automotive News reports.
Investors and analysts seem to think Tata bit off more than in can chew, as the falling market share suggests. The problem with building a car like the Nano to a specific, low price depends largely on the cost of raw materials, which have been skyrocketing lately. Tata plans to start trial production of the Nano by August, with the cars to go on sale in October.
