The reluctance of banks and other financial intermediaries to extend vehicle financing is the biggest problem for the Indian automobile industry, Tata Motors [Get Quote] Managing Director Ravi Kant said in Mumbai on Thursday.

Speaking to Business Standard a day after the company announced indifferent results for 2007-08, Kant said this year is going to be the toughest for the auto industry in a long time because of soaring input costs and crude oil prices. But the credit squeeze could have a far-reaching impact on the industry's fortunes.

"Interest rates are high, no doubt, but liquidity isn't an issue. The bigger problem is the unwillingness of most major financial players to lend. Some banks have already said that they would focus more on corporate lending and reduce retail lending as they are concerned about the rising non-performing assets. They may have their own reasons. But the automobile industry is bearing the brunt," Kant said.

The company is trying to beef up its financial arm to address this problem as automobile financing is the need of the hour, he added.

The country's commercial vehicle market grew a mere 4 per cent in terms of sales last year against double-digit growth a year ago.

The first Nano car will roll out from the Singur plant in West Bengal, Ravi Kant said, ending speculation over the possibility of rolling out Nano from other locations.

Kant said that the company is on schedule as far as the launch date of mid-October is concerned. Work at the plant is moving at a brisk pace.

Fierce agitation from locals, a political backlash and controversies over land acquisition, recruitment of workforce, arrangement of basic utilities and waterlogging during the last monsoon had already pushed the original deadline back five or six months.