The Tata Nano is available in two colours - AFP/File photo.

MUMBAI The world's cheapest car went on sale Thursday, with dealers and the company behind it confident of strong demand despite a slump in global car sales amid the world economic downturn, AFP reported.

Bookings opened for orders of Tata Motors' 100,000-rupee Nano at dealerships around the country with a spokesman describing sales as 'encouraging.' A steady trickle of customers was seen at Concorde Motors in Mumbai soon after opening, and by the end of the morning five people had booked a Nano and about a dozen had picked up application forms which cost 300 rupees each.

Prospective buyers were also able to get booking forms online for 200 rupees.

'The response has been encouraging and is progressively increasing,' said the spokesman, adding there were no exact figures on the number of forms sold.

Among those booking at Concorde was 82-year-old Naran Rao Pawar, a former assistant commissioner of Mumbai police, who said he used to drive a scooter but wanted to upgrade to a car.

'I wanted an independent car of my own. This falls under my budget,' he said. Pawar is looking to buy the 140,000-rupee LX version of the Nano, which has air conditioning, a plusher interior, electric windows and central locking.

The cheapest showroom price for the standard Nano is 112,735 rupees but it is available for 100,000 rupees direct from the factory, excluding taxes. The basic version has no air conditioning or air vents.

The Nano hits dealerships as sales of cars worldwide plummet due to slumping demand caused by the financial crisis.

Tata Motors, India's top vehicle maker, reported a 13 per cent fall in domestic sales for March while total sales for the year, including exports, were down 14 per cent.

Trader Mohammed Asim Khan was hoping to get the LX via a lottery to determine the first 100,000 owners.

The ballot has been devised because of supply problems after plans to produce the car at a plant in West Bengal had to be scrapped due to a violent dispute over land ownership last year.

The new factory in Gujarat state is not due to begin production until year end at the earliest so the cars are being built in the meantime at domestic Tata Motors plants elsewhere.

Within 60 days of closure of bookings on April 25, Tata Motors will announce the allotment of 100,000 cars in the first phase of deliveries through the computerised random selection.

But the supply shortage means even those lucky enough to win in the lottery could still end up waiting for more than a year as only up to 50,000 of the cars will be built in the first 12 months, analysts estimate.

Khan, in his late 40s and who already has two small Maruti Suzuki cars, said he was buying a Nano for his son, who is just 12 years old.

'After six years my son will drive the car. But I want to get it in my possession now,' he said.

The Nano, unveiled to great fanfare last month and expected to be on the road in July, has been in showrooms since April 1, attracting prospective buyers and curious crowds eager to catch a glimpse of the 'People's Car.' Tata Motors chairman Ratan Tata has said he hopes the little car, which measures just over three metres (10 feet) long and has a top speed of 105 kilometres (65 miles) an hour, will get millions of Indians off two-wheelers.

Tata said he wanted to create 'a safe, affordable, all-weather form of transport' for Indian families.

Families of four — and more — are regularly seen balancing precariously on motorcycles weaving through the country's notoriously lethal traffic.

Officials said the Nano website has recorded more than 50 million hits, including over 20 million since the March 23 launch.

Dennis Rankine, sales manager at another top Tata Motors dealership, said 'We expect strong demand.'