Is the World’s Cheapest Car Headed for the U.S.?

Last month, India’s Tata Motors introduced the world’s least expensive car: the Tata Nano, priced at around $2,400. Indian consumers are lining up to buy the vehicle, and the company has indicated that a U.S. edition isn’t out of the question. Is the time right for American consumers to embrace a new kind of auto? 

According to a report in The Economist, the company’s ambitions for the Nano are not “limited to India. The Nano Europa, a plusher version that meets Western safety and emissions standards, will go on sale in 2011, with an American version due a year or so later.”

“The interest in the Nano is worldwide,” Ravi Kant, Tata Motor’s managing director, told the publication.

In a recent interview with India Knowledge at Wharton, David Good, Tata’s “ambassador to the U.S.,” indicated a similar vision: “… I think at some time in the future, certainly some form of the Nano designed for American roads and American consumers is a very distinct possibility.”

The Nano runs on two cylinders, goes up to 75 miles per hour and reportedly gets 54 miles to the gallon. Given the recent volatility in gas prices and the current global downturn, what’s not to like? In an interview with Knowledge at Wharton last year, Wharton management professor John Paul MacDuffie alluded to some potential hurdles for U.S. Nano sales, including the need to meet stringent safety and emissions standards, as well as functional issues, like poor acceleration, which could be a turnoff for consumers.

Size, of course, is another hurdle. Despite recent declines in SUV sales, Americans still cling to six- and eight-cylinder engines. Meanwhile, a widely publicized video report from the nonprofit Insurance Institute for Highway Safety, released this week, shows the not-so-pretty results of crash tests involving “microcars” like the Honda Fit and Toyota Yaris. Despite the ongoing recession, reports like the Insurance Institute’s might help to keep U.S. consumers firmly ensconced in their larger, more expensive vehicles for some time to come.