Tata Motors, India's top vehicle maker, on Monday launches the Nano, the world's cheapest car, in a move that could dramatically change the auto market in the country.

The Nano debuted in January 2008 and was expected to be on sale late last year, but its arrival was delayed a dispute over the land where a purpose-built facility was to be located.

The ex-factory price of Nano is 100,000 rupees ($1,975), but to drive one out of the showroom, customers will have to add dealer charges and taxes, taking the on-the-road price up to 130,000 rupees, dealers say. Buyers can also pay for extras such as air conditioning.

The car can seat four people. Tata Motors Chairman Rata Tata has said his inspiration for the cheap car was the common sight of a family of four riding on a motorbike.

Dealers don't expect the Nano to be available before the mid-year. Bookings only start in the second week of April, and Tata Motors is expected to take time to make allotments and deliveries.

Large-scale production has been delayed by the relocation row that shifted production to Gujarat from West Bengal last year. As a stop-gap arrangement, Nanos will be rolled out from Tata Motors' existing car factories in Pune in western India and Pantnagar in Northern India.

Analysts estimate only about 50,000 cars will be available in the first year until the 250,000 capacity unit in Gujarat comes onstream.

According to Tata Motors, the Nano's safety performance exceeds current Indian regulatory requirements. It has an all sheet metal body and safety features include crumple zones, intrusion resistant doors, seat belts, strong seats and anchorages. Tata says the Nano's tubeless tyres, apart from reducing friction, provide better balance and stability.

A version for the European markets, Tata Nano Europa, will have even more stringent safety standards with anti-lock brake systems and airbags.

Tata Motors says the Nano's tailpipe emission performance exceeds regulatory requirements. It has a lower pollution level than two-wheelers being manufactured in India today. The Nano Europa has low carbon dioxide emission of less than 100 grams per kilometre. Environmentalists, however, worry that India's roads and infrastructure will struggle to cope with a surge in car ownership.

How does Tata manage to make (sell) a car so cheaply? The wheels are made of pressed steel, where the cost is less than using alloy. The positioning of the engine in the space behind the rear seat also keeps costs down. The engine was built in-house by Tata Motors, which has also worked with Germany's Krug to reduce capital and variable costs, such as paint and the number of tools used to make parts. Tata says the 100,000 rupee price tag would only be available for a limited period. - Reuters