India's Bajaj Auto, making an ultra low-cost minicar with Renault to challenge the Tata Nano, said on May 5 it wants the new compact to be cheaper, greener and deliver "pathbreaking" fuel economy.

The Nano, made by top Indian vehicle maker Tata Motors, sells for 123,000 to 172,000 rupees (US$ 2,700-3,800) and is billed as the world's cheapest car, pitching itself to the nation's millions of motorcyclists wanting to trade up.

Bajaj, India's second-largest two-wheeler maker which is tasked with building the new car by the Renault-Nissan alliance, said it was aiming to have the vehicle on the road by 2012 for $2,500.

But the sticker price "is only one part of the equation," Bajaj managing director Rajiv Bajaj said. "Our intention is to do a pathbreaking job with fuel economy."

"We remain very clear whether the car is 100,000 rupees or 150,000 rupees is not what's important," Bajaj said. "What counts just as much is mileage, maintenance and carbon emissions."

The design, engineering, sourcing and manufacturing of the model is being done by Bajaj, also India's top producer of three-wheeled motorized rickshaws.

Marketing and sales will be done by Renault and Nissan Motor whose president Carlos Ghosn also recently pegged the new car's price at $2,500.

Bajaj is focusing on developing a four-wheeler whose "cost of ownership is low enough to motivate two-wheeler buyers to upgrade," Bajaj said. "Our aim is to deliver mileage of 30 kilometers to a liter of fuel (71 miles per US gallon)," he said, aiming to better the mileage of the hatchback Nano of 23.6 kilometers a liter.

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