Nano, the small car from the Tatas, is projected to become India's second best-selling car next year, according to market research firm JD Power.
According to a report by JD Power, Nano will replace Hyundai's i10, which is slated to take the second position in 2010 after Maruti Suzuki's Alto. Tata Motor's Indica will be the third best-seller this year.
"The Nano is projected to hold the number two spot in 2011, after Tata ramps up production," JD Power Asia Pacific Forecasting Senior Market Analysts, Marvin Zhu and Ammar Master, said in a joint article.
"By 2017, we think the top three models will be the Alto, Nano and Maruti Suzuki Wagon R," the article said.
Currently, Alto is the highest-selling car brand in the country, selling an average 25,000 units every month.
According to the report, the combined sales of mini and sub-compact vehicles would be 9,97,000 units in 2010, increasing to 31,40,000 million units by 2017.
The size of the Indian domestic passenger car market stood at over 15 lakh units in 2009-10 and it is growing at a rate of about 30 per cent every month in this financial year.
Tata Motors had launched the Nano, touted as the world's cheapest car, in 2009 and is currently delivering the first lot of one lakh cars to the customers. It produces the car from Sanand in Gujarat and the facility has an installed capacity to produce 2.5 lakh units annually.
While the Nano managed to draw the attention of the world, of late it has been in the news for wrong reasons with six incidents of the car catching fire across the country, since its commercial launch in March 2009.
In the latest such incident, a Nano car caught fire in the capital on August 27. It prompted Tata Motors to say it would look into the cause of the incident, which came three months after a company probe had declared the car "absolutely safe".
The previous incidents were reported from across the country, including Mumbai, Lucknow and Vadodara.
JD Power further said the challenge for producers of low-cost cars in India will be to keep production costs low, while meeting rising consumer aspirations.
The government offers tax incentives to the small car buyers to promote fuel efficient mode of transportation. Cars that do not exceed four meters in length and are powered by 1200cc petrol or 1500cc diesel engines are levied 10 per cent excise duty compared to 22 per cent for other vehicles.