How Can the World’s Cheapest Car Affect Land Rover?

It costs less than a serious road bike, but can the Nano help save the company that now builds Land Rovers?

When the Volkswagen Beetle first came to the U.S., Detroit sniffed. Too cheap, they said. Too low-scale. And we all know what happened with that.

Now Tata Motors - the company we all know acquired Jaguar Land Rover (JLR) last year - is introducing the Nano. At under $2,000 U.S. – you read that right – it’s no more expensive than a decent road-racing bike or a high-zoot barbeque.

And it just might be the hitch that unties this particular company’s cash strap.

This two-cylinder juggernaut propels the 1,400 lb. car adequately enough (at least for budget-conscious commuters) and even includes A/C,  power windows, and yes… brakes. What it won’t include, however, are the requisite safety and pollution controls necessary to sell it here in the States.

But seriously… how much would that cost? So you throw in some airbags and some decent emission control systems and voila (or whatever the Indian equivalent of voila is) and bingo! You’ve entered into a larger world.

Already, Tata Motors’ stock value has risen “smartly”, as they say on the street, with nearly a 10% gain most likely based on the impending April 9 pre-sale date for the Nano.

Mr Arun Kejriwal said that considering the pent-up demand for the low-cost car and the limited availability, bookings for Nano will “ensure a steady and robust flow of liquidity” for Tata Motors in the next few months.

“Notwithstanding negative credit rating, Tata Motor will be flush with roll-on liquidity. Its revenue visibility would improve immensely despite lingering problems slowing sales faced by Jaguar-Land Rover.

That’s playing both ends against the middle, with a low(est) cost car shimmying up the high-end. When the market rights itself, it could likely go the other way around.

Tata group’s biggest challenge remains in refinancing the $2-billion outstanding bridge loan, made for the Jaguar-Land Rover acquisition, and JLR is still wooing government dollars to keep them afloat. They have already received $38 million and are asking – politely – for another $715 million.

Maybe if the government just drags its heels a bit while the Nano dollars start kicking in it won’t have to dig so deep into its pockets to save JLR after all.

Hey. It worked for Volkswagen.