Materials prices could push up cost of Tata's Nano

Tata's Nano ultra-affordable microcar continues to make waves that its original target price of $2,500 set the automotive world alight, and its low price is still causing fear for the future of the used car market in India. News of rising materials costs driving up the price of the car itself are beginning to surface, however, and Tata Motors is reportedly asking suppliers to help bear the burden.

Volume purchasing is helping to mitigate the rising costs, however, as it has deals with several of its suppliers to reduce prices paid per item when quantities rise, reports Automotive News. Tata has declined to comment on the matter.

The price of steel is the main problem, which, like oil, has hit record highs in the last month, rising over 30% to $742 per tonne ($675 per U.S. ton). Even with the higher materials costs and renegotiated parts contracts, it's not clear how or even if the price of the finished car will be affected. Tata Motors' parent company, the huge Tata Group conglomerate, also owns Tata Steel Ltd., India's largest steel producer, so it may be handling the price increase internally.