Ratan Tata wowed the world when he revealed his company's Tata Nano, the miniscule two-cylinder, four-door runabout designed to go to market with an equally tiny $2,500 price tag. Now, due to pressures from rising commodity prices, Tata may be in jeopardy of missing that now famous 1-lakh goal. Steel prices have jumped 30% since the car's initial unveil in January, while the cost of plastics, silicon and fuel oil have risen as well. So what's next for the bottom line?
It's not only a problem for Tata; across the board, material prices are gutting once-profitable programs. Imagine drawing up designs three years ago and projecting material parts budgets (which can often be up to 70% of the part price), only to have the most expensive element of the part jump in price by 40%. That's the kind of thing which blows engineering budgets. Tata is working with its suppliers and partners to determine what the pricing adjustments will look like (when an automaker says that, they mean lower price for them to buy supplies from suppliers, which also means less profit for the supplier), but it's clear they are trying to remain as close as possible to that original $2,500 target.
Jalopnik Snap Judgement: We'll still take three, with the racing stripes, as long as matte-black paint and rear-window shotgun holders are available options. [Automotive News Submission Req.]