As Tata begs the British Government for a rescue loan for its upmarket Jaguar and Land Rover brands, the Indian conglomerate is paving the way to launch the world's cheapest car on UK forecourts.

The European version of its ultra-cheap Nano will be unveiled at the Geneva Motor Show this week. The eventual retail price is rumoured to be about €5,000 (£4,400).

Tata has promised to sell the car for 100,000 rupees (£1,400) in India. Launched last year, it was heralded as a marvel of super-thrifty engineering that would redefine the auto industry. Tata executives have since suggested that the rear-engine, four-door runabout, designed to tempt India's middle classes away from their motorbikes and scooters, is now ideally suited to cash-strapped Western consumers.

Since buying Jaguar Land Rover before the credit crunch took hold in Britain and Europe, sales have collapsed and Tata is believed to be in discussions with the Government about a bridging loan. It needs to repay $2 billion (£1.4 billion) used to buy the business by June.

The 33bhp two-cylinder Nano may win favour with motorists keen to cut their fuel bills. There is, however, no confirmed launch date for Europe and the Nano is likely to have to undergo a comprehensive redesign to meet European safety standards.

Paul Watters, head of public affairs at the AA, said: “This will be for a niche market, but is bound to appeal to people who want cheap motoring. But the colour of the Nano's money will really seen if it can meet European safety specifications.”

Tata, which has the only crash-test facility in India, has said that the Nano “exceeds [India's] current regulatory requirements”.

However, the car has not had to undergo total vehicle crash (rather than just frontal impact) testing; nor are airbags, rear seat belts and antilock braking systems mandatory in India. Analysts believe that adding them might have doubled its price on the sub-continent, which may explain the much higher price speculated for the European version.

Other features that may be offered as standard in Europe include a stereo system, a left-side wing mirror, air conditioning and alloy wheels. Shipping the Nano to Europe from Tata's plants in India would also raise costs. However, Tata might sidestep some of those charges, as the Nano is designed to be constructed from a “kit” of components, with an eye to the creation of “satellite assembly operations”.

Tata announced that the tiny automobile would be on display at Tata Motors dealerships in India from the first week of April, with bookings starting a week later. The final price of the car will be confirmed on March 23.

The project has been beset with hurdles from the outset. Environmentalists said that the last thing India's gridlocked cities needed was more traffic. Last summer, it was feared that the surging price of raw materials had scrambled the low-cost business model that Tata had formulated. Since then, commodity prices may have collapsed, but so have car sales in India amid mounting white-collar job losses and a dearth of credit.

Tata ultimately hopes to sell one million Nanos a year in India. For much of this year, however, the car will be available in relatively small numbers, estimated at about 3,000 a month by analysts, after the company was forced to abandon its original factory.

Cheap and cheerful

The expected price for the World Nano of €5,000 (£4,400) is more than three times what Indians will pay for the basic Nano model when it goes on sale there next month

The UK price is comparable to many popular brands of scooter and less than that of the much-vaunted Segway, the American two-wheeled, self-balancing electric vehicle

The lowest specification Segway, with no extra features, is listed for sale with some British dealers at £4,795

Triumph's classic Bonneville motorcycle is listed this year at £5,439 and the cheapest “city car” models, such as the Ford Ka and Citroën C1, are priced at about £7,500

You can pick up a Vectrix electric scooter, which has battery power equivalent to 400cc and is claimed to have zero emissions, for £5,998

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