Tata Motors is seriously reconsidering the launch of the Tata Nano diesel altogether in the Indian market. Though the Tata Nano diesel has been in the works since 2010 and has reached an advanced stage of development, market conditions have changed significantly since then. The gap between petrol and diesel prices have narrowed signficantly, prompting a swing in demand back to petrol cars, especially at the lower end of the market. Over the past year and a half, petrol prices have risen by just 4.5 percent while diesel prices have soared by a whopping 30 percent, significantly reducing diesel’s cost effectiveness.
Tata Motors has developed two diesel engine configuration options for the Nano – a two-cylinder and a three-cylinder – but the company is yet to finalise which one to introduce in the market. The cost of the diesel engine is proving to be another stumbling block, turning out to be too expensive, especially in BS IV specification. Therefore, the higher sticker price for a Tata Nano diesel would make it hard to justify the advantage in running costs for customers.
Tata Motors recently launched the Nano CNG, with a starting price of Rs 2.52 lakh (ex-showroom, Mumbai). As a fuel, CNG offers comparable if not lower running costs than diesel and hence already caters to customers looking for a more economical option than petrol, which further weakens the case for the Tata Nano diesel.
As a result, we do not expect the Tata Nano diesel to be showcased at the forthcoming Auto Expo in Delhi.