Tata Motors, the country’s top vehicle maker, sees initial demand for its Rs 1-lakh Nano topping supply, but expects the full year till March to be tough because of high input costs, the chairman said.

Tata Motors, which recently purchased the Jaguar and Land Rover (JLR) brands for $2.3 billion, is scheduled to roll out the Nano, the world’s cheapest car, around October. To be priced at Rs 1 lakh, the car will yield sufficient margins from the different models, Tata said.

“We expect demand to exceed supply and we will have to figure out an appropriate system of deliveries,” chairman Ratan Tata said at the annual shareholders’ meeting on Thursday.

The plant at Singur in West Bengal will have an initial capacity to make 2,50,000 units, which can be scaled up to 3,50,000 units. The Nano, which is likely to grab share from other car makers and shift motorbike users more quickly to cars, will have a gasoline engine at first and will then come in a diesel variant.

Tata Motors will make a more fuel-efficient variant of the Nano at the eco-car project in Thailand, he said, adding that the company is also looking at building an electric car as well as a model that uses compressed air, in alliance with a French firm.

While vehicle makers have raised prices by up to 3.5 per cent recently, it was not possible to pass on the full extent of higher input costs to consumers, Tata said.

“It is not possible to pass them all on ... if we passed on all costs to the consumer, it will affect demand, and if we don’t it will affect margins,” he said. “The auto industry is under pressure, and the pressure is only going to increase. We have a difficult year ahead of us.”

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