Tata Motors may start Nano production in Indonesia

Shelving its expansion plans in Thailand and opting for fast-growing Indonesia, India's Tata Motors is in talks with a leading Indonesian automobile company to produce its popular no-frills Nano car.

Indonesia appears to have gained an edge over Thailand as the production site for the Tata Nano, the world's cheapest car, the Bangkok Post said today, adding that Thailand was in contention to make the Nano since the Indian auto-maker has been producing its Xenon and Ace light trucks at its factory in Samut Prakanin since 2009.

However, since Indonesia offered more attractive incentives, Tata decided to shelve the expansion plan in Thailand, the paper said, quoting unnamed sources.

Quoting the source, the paper added that Tata was concerned about political stability in the country and also found the local automobile tax structure discouraging.

The Indian company is now said to be in talks with PT Astra International, Indonesia's leading automobile company, to produce the car.

Tata was one of seven manufacturers looking to develop eco-car projects in Thailand, but it scrapped the plan because of concerns about an unfavourable tax structure and the requirement to produce at least 100,000 cars a year by the fifth year of operation.

A Tata spokesman said at the time that the company wanted to build a highly fuel-efficient and environment-friendly car in Thailand that would be suited to Thai consumers' needs.

However, it probably would not be the Nano.

The source confirmed, however, that Tata would launch a Nano imported from India by the end of this year at the Thailand International Motor Expo to build consumer awareness about Tata's passenger car brand before the cars are actually built in Indonesia.

The deliveries would start early next year.

The Nano to be marketed in Thailand will come with a 600-cc engine, but with enhanced performance and speed to meet Thais' preferences.

The top speed will be raised to 120 km/h from 105 km/h, the top speed for the Indian model.

The model to be sold in Thailand will also have more features, including power windows and air conditioning, as standard equipment.

Earlier, Tata planned to introduce a premium variant called the Nano Europa in Thailand, but it concluded that adding more features, including power steering and ABS braking, would make the car more expensive than the Nissan March and Honda Brio eco-cars.

Tata is expected to produce 50,000 Nanos a year at a its plant in Jakarta, starting 2013.

It plans to export the cars to Thailand, Malaysia and the Philippines as it is banking on their large populations and big demand for low-cost cars, the paper said.