Renault-Nissan, India's Bajaj Announce Project to Produce Inexpensive Cars

The car will cost $2,500 and be available in 2011.

Renault-Nissan and Bajaj group said on May 12 they planned to make a $2,500 car by early 2011, the second effort to make a cheap car for the South Asian nation's rapidly growing middle class. The budget car, which would cost 100,000 rupees in India, is so far only known as "Codename ULC." The joint venture would be 50% owned by Bajaj Auto, 25% by Renault and 25% by Nissan.

The ULC will be produced at a factory to be built at Chakan, Maharashtra, in western India. It will eventually produce 400,000 units a year, the two groups said.

"(The small car) will offer twice the fuel economy than the existing products in the market," Bajaj Auto managing director Rajiv Bajaj had said earlier, with the firm aiming for 34 kilometers (21 miles) on a liter of fuel.

Bajaj is India's second-biggest motorcycle maker, and Religare Securities automobile analyst Piyush Parag said the proposed vehicle's low price could be a boon for the firm. "Bajaj will have a price-point advantage, with few cheap alternatives available in the car segment," the expert said. One of the few rivals could be Tata Motor's Nano, unveiled earlier this year and billed at the time as the world's cheapest car. Tata said the car could be ready for sale by September and plans to sell it for around $2,500.

Toyota Motor Corp. and Honda Motor Corp., among other firms, have also said they are mulling manufacturing low-cost cars as India's population becomes more affluent and trades up from motorcycles.

Copyright Agence France-Presse, 2008

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