Tata Motors Ltd. unveils the Nano, its long-anticipated “one lakh” or “people’s car,” in India today.

The Rs100,000 ($2,500) Nano carries the distinction of being the world’s lowest-priced passenger car, undercutting by half the current frontrunner in India, Maruti Suzuki India Ltd.’s 800 minicar that has been the least-expensive car available in India up to now.

“Let me assure you and our critics the car we have designed will meet all safety norms and all foreign environment criteria,” Ratan Tata, chairman, is quoted as saying during the Nano’s unveiling at the New Delhi auto show.

The rear-wheel-drive, 4-door Nano is 122-ins. (310-cm) long, 63-ins. (60- cm) high and 59-ins. (150-cm) wide. In comparison, BMW AG’s Mini is 146-ins. (370-cm) long, 55-ins. (141-cm) tall and 66-ins. (168-cm) wide.

The Nano is powered by a rear-mounted, 0.6L 2-cyl. gasoline engine that Tata claims is the first use in a car with a single balancer shaft, Reuters says. Ratan Tata promises diesel variants of the Nano at a later date.

The Nano gets a combined average 47 mpg (5 L/100 km) and pollutes less than 2-wheelers, Tata says, noting it exceeds current tailpipe regulations in India.

The safety of such a small vehicle has been a topic of discussion since its announcement. Tata says the Nano’s body is constructed entirely of sheet metal, with crumple zones as well as doors that resist intrusion.

Tata will offer three trims: one basic and two deluxe, reports say.

Auto analyst Ashvin Chotai tells Reuters margins will be “very, very thin,” at the current price.

Others on hand for the unveiling include executives from rival auto makers. “I think it’s a moment of history, and I’m delighted an Indian company is leading the way,” Anand Mahindra, managing director-Mahindra & Mahindra Ltd., is quoted as saying.

A Maruti Suzuki executive admits his company cannot compete with the Nano. “We cannot make a cheaper car,” Shinzo Nakanishi, managing director, says in reports. “We don’t know how to make a 1-lakh car, unless we sacrifice something.”

Nevertheless, the announcement by Tata that it was developing such a vehicle has sent competitors scrambling to match it, most notably the Renault Nissan Alliance.

Partners Renault SA and Nissan Motor Co. Ltd. late last year struck a deal with India’s Bajaj Auto Ltd. to build a $3,000 car for developing markets, including India. And Nissan CEO Carlos Ghosn has suggested the possibility of offering such a vehicle in mature markets as well, believing large auto makers lose their edge when they don’t make competitive small vehicles.

“If someone’s going to do it, we can,” Ghosn said in October in Tokyo. “We organized (the potential deal with Bajaj) because we are obviously unable to get the $3,000 car out of France or Japan.”

However, he has been non-committal about exporting the model to Western markets. “I’m not saying ‘yes or no.’ I’m saying we don’t have enough data today to answer whether it can be exported to mature countries.”

Tata initially plans to build 250,000 Nanos annually, with demand projected to hit 1 million units annually, officials say. Reportedly the auto maker will wait two or three years before deciding whether to export the model to Africa, Latin America and Southeast Asia.

cschweinsberg@wardsauto.com