July 24 (Bloomberg) -- Tata Motors Ltd., maker of the $2,500 Nano car, will introduce the vehicle in the October-December quarter, Chairman Ratan Tata reiterated.

The company's plant in Singur, West Bengal state, which will make the Nano, is nearing completion, Tata said at the company's annual shareholders' meeting in Mumbai today. Heavy rain had flooded the plant site and slowed work on it, he said.

``We'll do our best to get the product out as close to the timetable we had,'' Tata said.

Tata Motors' Nano is aimed at first-time car buyers in India, where more than 45 million people use motorcycles. The automaker, which purchased the Jaguar and Land Rover luxury brands from Ford Motor Co. for $2.4 billion, wants to challenge Suzuki Motor Corp.'s dominance of the Indian car market.

High fuel prices, interest rates and inflation make the current year a difficult one, Tata said today. Apart from the Nano, the company is developing an electric car and fuel-saving devices, he said.

The electric car is being developed for Norway and will be introduced this fiscal year, Tata said. The vehicle will be introduced in other markets subsequently.

The company is looking at resurrecting the Daimler brand owned by Jaguar, he said.

Tata Motors plans to boost capacity to produce the Nano due to higher-than-expected demand in India and overseas, Tata had said in the company's annual report for the year ended March 31. Demand for the Nano is expected to exceed supply, Tata said today.

New Variants

The carmaker will begin production of the model in the last quarter of this year, Tata had said in the annual report. The Mumbai-based company is working on developing new variants of the 623-cc car, which was unveiled in January.

Tata Motors is building a factory that can make 250,000 Nanos annually at Singur.

Almost seven motorcycles are sold for every car in India, where about half the population of 1.1 billion lives on less than $2 a day, according to World Bank.

At about 100,000 rupees ($2,375), the Nano will cost almost half as much as Suzuki's Maruti 800, the cheapest car currently on the market. The Nano is powered by a two-cylinder engine mounted in the back which generates 33 horsepower.

The Nano will initially be sold as a petrol-driven car and will have a fuel efficiency of 50 miles to the gallon, Tata said. A diesel version will be introduced later, he said.

The Thailand Eco car project that Tata Motors is participating in will seek to build a more fuel-efficient version of the Nano, Tata said.

To contact the reporter on this story: Vipin V. Nair in Mumbai at vnair12@bloomberg.net.

Last Updated: July 24, 2008 09:48 EDT