http://online.wsj.com/article/BT-CO-20100602-702951.html?mod=WSJ_World_MIDDLEHeadlinesAsia UPDATE: Tata Motors Opens Factory For World's Cheapest Car SANAND, India (Dow Jones)--Tata Motors Ltd. (500570.BY) Wednesday opened its first dedicated factory for the Nano mini car, a move that the company hopes will help clear a large backlog of orders for the world's cheapest car. Tata Motors will now produce the Nano--priced INR123,361 ($2,616)--at a plant in Sanand, in the western state of Gujarat. The car is currently manufactured at a factory in Pantnagar, where Tata's Ace mini truck and Magic people carrier are also made. Deliveries from the new plant will start in June, but to help clear a backlog in orders, the company will continue producing the Nano at its Pantnagar factory in north India's Uttarakhand state. Built with an investment of INR20 billion, the Sanand factory will have a capacity of 250,000 cars in the first year, but that could eventually rise to 350,000 per year, India's biggest auto maker by sales said. Tata Motors, which controls U.K.-based luxury car brands Jaguar and Land Rover, began deliveries of the Nano last July after receiving a record 206,703 bookings during April-June 2009. Tata Motors plans to have delivered the first 100,000 cars to showrooms in Delhi by December. Because of the backlog, the company isn't taking any new orders for the 624-cubic centimeter, snub-nosed car with a rear gasoline engine. The Nano is under close scrutiny at the moment after two of the cars caught fire earlier this year. Tata Motors is currently investigating the incidents, and since May 24 it has been contacting all Nano owners in order to inspect their cars. The decision to inspect all Nano cars follows a study by a 20-member internal team and an independent forensic expert. However, Tata Motors said these inspections don't constitute a recall and moved to assure customers by saying that the Nano is a safe car, "with a robust design and state-of-the-art components." The Nano was conceived by Ratan Tata--patriarch of the diversified conglomerate Tata Group and chairman of Tata Motors--in 2003 as a low-cost and fuel-efficient alternative means of transportation to the millions of motorcycle and scooter riders in India. "We will see the product of this state and of Sanand on the roads of India, giving the people of India a chance to have personal transport," Ratan Tata said at the inauguration of the new plant. Tata Motors, Volkswagen AG, General Motors Co., Nissan Motor Co., Renault SA and other global auto makers are investing billions of dollars to build new factories in India, where an expanding economy, easier availability of loans and rising disposable incomes, as well the introduction of new models, is fueling demand. The Nano has prompted auto makers such as Renault, Nissan, General Motors Co. and Hyundai Motor Co. to explore developing their own low-cost mini cars for India, where annual car sales are forecast to grow to three million units by 2016. Sales were 1.53 million vehicles in the fiscal year ended March 31. The opening of the Sanand factory will likely be a boost for Tata Motors, which recovered to a consolidated net profit of INR25.71 billion in the fiscal year ended March 31 after posting a loss the previous year. Last year's figures were helped by an asset sale and a rebound in global vehicle sales. Tata Motors shifted operations to Sanand after deciding in October 2008 to abandon a planned site in Singur, in the eastern state of West Bengal, following violent protests over the acquisition of disputed farmland. The Sanand factory was initially scheduled to be commission by the end of March, though Tata Motors hasn't said why the project has been delayed til now.