India's largest vehicle maker, Tata Motors, said one of its ultra-cheap Nano cars caught fire on Wednesday as it was driven to a dealer, the second such incident this year.
A Tata Motors spokesman said the company was investigating the problem.
"We are sure that it is not a design flaw. We are looking into it," he said, adding that the Nano had complied with all safety requirements.
Last month a Nano was engulfed in flames in the western city of Mumbai minutes after it had been delivered to the customer, media reports said.
Last week PM Telang, managing director of Tata Motors' domestic operations told reporters that the fire incident in Mumbai was being investigated.
"We are still investigating the cause of the fire," he said.
Tata Motors started deliveries of the Nano - a show-stopper at the New Delhi autoshow in 2008 where it was first unveiled - in July last year and there are more than 30,000 Nanos on the roads.
Last year a few Nanos caught fire and the company said it had identified the problem as faulty ignition switches and was changing the vendor who had supplied the parts.
Tata has plans to sell gasoline-engine Nanos in Europe by next year and in the United States in the next three years.