Tata likely to shelve the diesel version of Nano

Tata Motors is seriously reconsidering the launch of the Nano diesel altogether in the Indian market. Though the variant has been in the works since 2010 and has reached an advanced stage of development, market conditions have changed significantly since then. The gaps between petrol and diesel prices have narrowed significantly, 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.

TM 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.

The recently launched CNG Nano, with a starting price of ₹ 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 diesel variant.

As a result, we do not expect this vehicle to be showcased at the forthcoming Auto Expo in Delhi.