The hidden costs of the world's cheapest car

Posted By Joshua Keating Tuesday, July 29, 2008 - 5:31 PM Share

RAVEENDRAN/AFP/Getty Images

Speaking of cars, if you thought India's Tata Nano, the world's cheapest car at $2,500, sounded too good to be true, you may have been right:

Malhotra is having second thoughts. He's done the math and realized that once taxes and insurance costs are added, the price of the entry-level Nano rises to just over $3,000. For an extra $500, he says, he could buy a decent used car with a more powerful engine and air conditioning, which the Nano won't have.

To make things worse, rising global steel prices and a recent flood at the Tata factory in East Bengal are slicing the company's profit margin razor thin. Given that increasing the price isn't really an option since the price is the whole point, the ambitious project's prospects look dim.

Maybe Thomas Friedman didn't have to worry after all.

EXPLORE:BUSINESS, ECONOMICS, INDIA

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