Here's a competitor for Tata Motor's small car Nano. Renault-Nissan head Carlos Ghosn and Bajaj's Rajiv Bajaj unfolded their joint venture plan on Monday, announcing a low-cost car at $2,500 (Rs 1 lakh) to be manufactured in India. The car is expected to hit the road early 2011, a little more than two years after Nano, which is scheduled to roll out in September-October.

Sources said the Bajaj-Renault-Nissan car would come in both petrol and diesel options. "Initially, it would come with a petrol version and diesel would follow," they said. However, apart from revealing the price tag, the two companies refused to give details regarding investments, engine capacity, and fuelefficiency.

Sources added that a threeway MoU (memorandum of understanding) could be signed by June with the companies now busy on finalising the technical and legal nitty gritties of future engagement.

In a statement issued on behalf of Bajaj and Ghosn, the companies said they they would form a joint-venture to develop, produce and market the low-cost car code-named 'ULC' (most probably Ultra Low Cost). The new JV will be 50% owned by Bajaj Auto, 25% by Renault and 25% by Nissan (a group company of Renault).

While sceptics had initially doubted the viability and potential of a low-cost car segment priced below $3,000, Ratan Tata went ahead with his dream project, which saw others also drawing plans. Ghosn, who has already tasted success in emerging markets with his 'no-frills' Logan, feels that a new low-price compact not only has potential in a big market like India but can also be pitched well in other similar markets abroad.

Bajaj-Renault-Nissan would manufacture the proposed car at Chakan, in Maharashtra, where Bajaj already has a plant. "Initial planned capacity will be 400,000 units per year. Sales will start in early 2011 in India, as a primary market, with growth potential in other emerging markets around the world," the companies said. Others players are also eyeing this ultra low-cost segment. South Korean auto major Hyundai, that has already made India a hub for manufacturing small cars like 'i10' and 'Santro', is also working on a low-cost car project to be positioned below Santro. General Motors is developing a car in the range of $3,500-$4,000 (Rs 1,40,000-Rs 1,60,000).

Analysts said the focus on the low-cost segment is set to yield rich dividends for the Indian automobile industry. Both engineering and manufacturing sectors would receive a boost as most of the car makers, including GM and Hyundai, have said India would be the base to develop and manufacture such a car.

SMALL IS Big
As Ratan Tata's Rs 1 lakh wonder Nano is set to rock the world in September-October, a couple of other biggies have also started driving in the same lane

BAJAJ-RENAULT-NISSAN
The combine plans to rival the Nano's breakthrough
Rs 1 lakh
price tag and launch the car (ULC) in early
2011

HYUNDAI
The South Korean car major has also announced its intentions to come out with a low-cost car and said this will be priced below Santro
Rs 2 lakh

GENERAL MOTORS
US auto major has also pitched in for a slice of the segment and is working on a mini car priced between
Rs 1.4-1.6 lakh

Source: TNN