A brand new Tata Nano burst into flames as the owner was driving it home from the showroom in Mumbai on Thursday.
Software engineer Satish Sawant, his wife and five-year-old son clambered out of the car just minutes before the it erupted in flames.
The incident has shown the latest problem with the car, raising fresh questions about safety and quality.
Tata Motors spokesperson Debasis Ray said the company is investigating the incident.
"We believe it was a one-off stray incident," he said.
"It did catch fire. We’re trying to figure out what may have caused it."
Tata has offered Sawant a replacement Nano or a refund.
This is not the first time there have been customer complaints about the Nano. Last year, three customers complained their Nanos started emitting smoke. Tata Motors attributed that to a faulty electrical switch and said it had changed suppliers.