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This brand new Tata Nano caught fire as Satish Sawant, a software engineer based in Mumbai, was driving it home from the showroom earlier this month. Image Credit: AP

Mumbai: Satish Sawant was proudly driving his first car home from the showroom. Then there was smoke. And then there was fire.

Minutes after the software engineer's wife and five-year-old son clambered out of the back seat, smoke from the engine, located in the Nano's rear, erupted into flames that engulfed the tiny car.

His ordeal showed just the latest problem with the low-cost Nano — raising fresh questions about safety and quality as top Indian carmaker Tata Motors sets its sights on global expansion and aims to ramp up production of the Nano with a new factory next month.

"My wife now doesn't want to buy any car," Sawant said by phone from his home in northern Mumbai.

Starting around $2,500 (Dh9,179), the Nano has been heralded as the world's cheapest car.

Tata Motors, which also owns Jaguar and Land Rover, plans to start selling versions of the Nano in Europe in 2011, and later, in America.

Investigation launched

Tata Motors spokesman Debasis Ray said the company is investigating the incident but believes it to be a one-off problem rather than the result of faulty design or manufacture.

"We believe it was a one-off stray incident," he said. "It did catch fire. We're trying to figure out what may have caused it."

Tata has offered Sawant a replacement Nano or a refund. This is not the first time there have been customer complaints about the Nano, which has been feted with rave reviews and awards since its launch.

Last autumn, three customers in India complained that their Nanos started smoking. Tata Motors attributed that to a faulty electrical switch and said it had changed suppliers and done additional tests to rule out a recall or redesign.

Ray said the incidents are not related. But some say the Nano's problems are symptomatic of pervasive quality control issues at India's number three carmaker, which must be addressed before Tata can successfully take its brand global.

"As of today, is Tata good enough to take on the world? I would say no," said Deepesh Rathore, an auto analyst at IHS Global Insight in New Delhi. "On quality standards, Tata barely makes the cut."