Tata to produce hybrid Nano model in India

India’s Tata Group has announced plans to produce hybrid versions of its cheapest vehicle - the Nano - in its home market.

The Nano, which at 100,000 rupees (£1,306) for a basic model is the cheapest car in the world, first became available in India in July this year.

Ratan Tata, the chairman of both Tata Group and Tata Motors, India’s largest car producer, told the Maeil Business Newspaper in South Korea today that the firm now intends to produce a new vehicle that can run both on petrol or diesel and a battery.

He added that low-priced goods would continue to drive sales more quickly in India than high-cost goods, but the so-called price revolution would continue to spread across the world.

Tata’s move follows the announcement earlier this month by Carlos Ghosn, chief executive of both Renault and Nissan, that it had signed a deal with Indian partner Bajaj Auto to create a car able to trump any other, including the Nano, in terms of fuel efficiency by 2012 and market it in India.

The talks began two years ago around a vehicle that would be priced at between $2,500 and $3,000, but Ghosn refused to be drawn on any pricing changes, promising only that it would be the cheapest car to produce and run.

He is targeting the bottom end of a rapidly growing Indian car market, which he believes will increase in sales terms from two million vehicles a year to six million in the next decade.

Both Renault and Nissan will provide Bajaj Auto with technical support while it is designing and manufacturing the new automobile, but will market and brand it in both India and emerging markets such as Africa, parts of Asia and Latin America.