MUMBAI, India (AP) – Satish Sawant was proudly driving his first car home from the showroom: A brand-new silver Tata Nano, draped with a celebratory garland of marigolds.

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 on Thursday. “She doesn’t even want to go for a Mercedes.”

Starting around US$2,500, the Nano has been heralded as the world’s cheapest car, and was meant to usher in a safety revolution, which would get millions of families off dangerous motorbikes and into the cool comfort of an affordable 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.

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 a year ago.

Last fall, 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 Thursday that the incidents are not related.

The switch problem, he said, “has been comprehensively addressed.”

“Safety has never been an issue with Tata cars,” he added. “They are one of the safest cars on Indian roads.”

But some say the Nano’s smoke and fire 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 — especially in the wake of Toyota’s massive recalls, which have left car buyers jittery about safety standards.

“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.”

There are fewer than 30,000 Nanos on the road today, which means on a percentage basis the problem rate is fairly high, he said.

“The Nano is a wonderful product, but these incidents really tarnish the image of the car as well as the company,” Rathore said. “This is the time for Tata to have a deep look at quality.”

He said the recent addition of Carl-Peter Forster, former head of General Motors in Europe, as group chief executive is a step in the right direction.

“They’ve got a guy running the show now who knows how the industry should work,” he said. “How soon will the effects be seen across the Tata product range? Well, that will take time.”

Meanwhile, Uruvashi Shah, manager of Ashapura Travel World, which runs a high-end taxi service, said she has gotten rid of all the Tata models in her fleet because they needed too much repair work.

She prefers Toyota.

“Corolla is quite good. There is a comfortable feel but the mechanical side is good too,” she said.