Tata Motors Ltd. is all set to launch its much-hyped small car. Some ten years back, Tata had launched its first car that established the truck maker’s credentials as a car maker in Indian auto market.

Recently, the company announced its biggest initiative till the date, a small car for just $2,500. The cost of the car will be less than half the cheapest car available in Indian market. This is being said that Tata’s ‘People’s car’ will place Tata Motors in the global automotive market.

Tata’s car will have a 600cc engine. It will have an initial production run of 250,000 units. It’s further demand of 1 million cars might be assembled by dealers or satellite units across the country.

Earlier, auto analysts had mocked Tata’s 1-lakh car because of roaring oil and steel prices in international market. However, the company was firm to fulfill his dream to produce people’s car in the country. Mohit Arora, managing director for India at research firm J.D. Power Asia-Pacific said that the product has rightfully gained a lot of international attention.

He said:

It’s a big, big deal for Tata Motors, and will be recorded in history books, whether or not it does well.

Now, other well-known car makers such as Volkswagen, Toyota Motor Corp, Honda Motor Co and Fiat have reportedly started looking to build low-cost cars now. According to the report, the Nissan Motor Co and Renault alliance is planning to develop a $3,000 car with Bajaj Auto Ltd.

Earlier, Maruti 800, produced by a joint venture of the government and Japan’s Suzuki Motor, had similarly revolutionized the auto market in 1980s. Now, the small cars, led by different models such as Alto and Santro, have captured more than two-thirds of a domestic car market. Its share is likely to go double to 2 million units a year by 2010.

In the wake of increasing oil prices, people are shifting towards compact and small cars. However, some of the environment experts have expressed concerns a cheap car could be more damaging to the environment by adding more pollution. In India, only 8 persons per 1000 own a car and it makes a huge potential for the success of such cars in Indian market.