Tata today unveiled a high-specification European version of the Nano, its ultra-cheap automobile, at the Geneva motorshow.

It may prove the definitive credit-crunch car, with rumours suggesting it will be priced at about €5,000 (£4,400), which could make it the cheapest new motor on the British market.

The basic version of the Nano, which Tata has promised to sell for 100,000 rupees (£1,400) in India, was heralded as a marvel of super-thrifty engineering that would redefine the auto industry when it was unveiled last year.

Tata executives have since suggested that the rear-engine, four-door runabout, which was designed to tempt India’s middle classes from their motorbikes and scooters, is ideally suited to appeal to cash-strapped western consumers.

The Indian conglomerate said that the new “Nano Europa” was “intended for a future launch in select international markets”, but gave no firm dates for the model’s forecourt debut. The Times reported that the model would appear in Geneva on Monday.

The European version of the Nano is slightly longer than its Indian cousin, but still sports a wheelbase of only 2.28 metres — a Fiesta has a wheelbase of about 2.48 metres.

The Nano's new incarnation also sports a little more heft under the bonnet, boasting a three-cylinder “sporty” all-aluminium engine with 5-speed automatic transmission, and electric power steering, Tata said.

Crucially, the company suggested that the Europa also meets all European safety regulations.

It is unclear whether the Indian Nano would even be considered eligible for safety tests in Britain. The new Nano also has ABS brakes and air bags, features that Indian motorists who buy the basic version will have to make do without.

Last week, Tata announced that the original Nano will finally go 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 in India will be confirmed on March 23.

The project has been beset with hurdles. From the outset it drew waves of dismay from environmentalists who said the last thing India's gridlocked cities need is more traffic.

Last summer, it was feared that the surging price of raw materials had scrambled the low-cost business model 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.

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