Tata Motors seeks new sites to make Nano

TATA Motors sought new sites for its cheap car plant yesterday after protests forced it to suspend work on the project, a crisis seen as a big blow to India's effort to attract investors.

The company, which became globally known when it bought British luxury cars Jaguar and Land Rover earlier this year, hoped to have its cut-priced "Nano" model rolling off the production lines and in showrooms by October.

But analysts say the launch of the groundbreaking vehicle, conceived by Tata chief Ratan Tata to get poor Indians off motorcycles, would be delayed by months if the assembly line was moved to other Tata factories in India.

A Tata statement late on Tuesday fell short of declaring the company was exiting Marxist-ruled West Bengal state in eastern India for good. But it would be "highly optimistic to think of a (swift) return to normalcy at the Singur site", a senior Tata official said.

The announcement shocked business leaders, who warned it would hurt India's image as an emerging economic superpower and viable investment destination.

Investor confidence would be "completely shattered", said Venu Srinivasan, chairman of leading Indian two-wheel seller TVS Motor.

India's most powerful businessman, Mukesh Ambani, chairman of Reliance Industries, has said the protests are "counter-productive for the country's economic growth, its global image as well as our ability to attract investments from across the world".

Koito readies new lights for Nano

KOITO Manufacturing Co, the maker of head lamps for Lexus brand cars, is designing lights specifically for ultra- low cost cars as it tries to win more business from Tata Motors Ltd and Nissan Motor Co.

“Koito, the worlds' biggest maker of headlamps, is in the final stages of creating a simpler light that uses half as many parts as its more expensive models,” said the company's president Masahiro Ohtake on Thursday.

Koito and other auto parts makers are reengineering products for use in cars that cost almost half as much as Suzuki Motor Corps Maruti 800, the cheapest car currently on the Indian market. Tata will sell its $2,500 Nano later this year.

Nissan plans to produce a car with the same price by 2011 for India and other emerging markets. “Koito has no choice but to push into this low- cost market as all the carmakers get into the business,” said Kunihiro Matsumoto, a senior analyst at UBS Securities Japan Ltd in Tokyo. Costs wont bump up with Koito using existing technology and cheaper labour.

The parts maker opened a second Indian plant in September in Haryana to be closer to factories of automakers including Maruti Suzuki India, Ohtake said. The company now supplies lights for Tata's trucks. “A low- cost car requires ahead lamp design all its own,” Ohtake said.

Cars at about $3,000 are something that is being talked about on a global level and will become a big business. Koito is 20 per cent owned by Toyota Motor Corp. Tata unveiled the Nano in January and will begin selling the model later this year. The firm may export the car after three years, Ratan Tata, the Tata's chairman, said in January.

Nissan, France's Renault SA and India’s Bajaj Auto said on May 12 that they would build a$2,500 car in India to go on sale in 2011.

Toyota also plans to build a new low cost small car in India in 2010. Toyota's new factory will be near Bangalore. Koito already supplies headlamps to Toyota from its facility in Chennai. Koitos Indian operations are in joint venture Lucas TVS.

India’s passenger car sales, which doubled in the past five years, are set to triple to three million vehicles annually by 2015, according to the Indian government. Global sales of small cars will rise to 8.5 million vehicles by 2020 from 5.2 million last year, said Michael Wynn- Williams, a London based analyst at consulting company Global Insight Inc. Stanley Electric.

Koito faces competition from Stanley Electric, which in February raised its stake in Lumax Industries, India's largest maker of automotive lighting, and a supplier to Tatas Nano. Stanley owns 46.3 per cent of Lumax, according to data compiled by Bloomberg. Lumax makes headlamps for Tatas Indica Xeta hatchback, Safari Dicor sport- utility vehicle (SUV), Sumo Victa SUV and Ace truck, according to it's website.

Tokyo- based Stanley started transferring technology to Lumax in 1984 and began investing in the company in 1994. Koito plans to increase research and development to five per cent this fiscal year to 21.9 billion yen. Research spending as a percentage of estimated sales of 474.6 billion yen will be little changed at 4.6 per cent, according to the company.