Low-charge Lite brigade

India's $3000 Tata Nano will face a surprising new rival from Renault-Nissan.

The European carmaker has just signed a joint-venture agreement with Indian motorcycle maker Bajaj Auto to build a mini-car codenamed the ULC (ultra-low-cost) to compete against the Nano.

However, Renault-Nissan hasn't decided if the car will be sold with Nissan or Renault badges in some Western markets.

Like the Nano, the ULC is aimed at the growing Indian market. It gave clues to the car's possible Euro-look at January's Delhi motor show when it unveiled its Lite concept car.

Company spokesman S. Ravikumar says the Lite show car and ULC would merge into the final production car.

“There is only one car project and the car the joint venture is going to launch is codenamed ULC,” he says. “There are not two cars or two projects.”

Ravikumar says the Bajaj shown at the Delhi show was at the time referred to as the Lite.

“Since then the third-party deal has been struck for the same business idea and all thoughts have now merged into the car codenamed ULC,” he says.

The ULC will be built at a new plant in Chakan in India with initial planned capacity of 400,000 units a year.

The joint-venture company will be 50 per cent-owned by Bajaj, Nissan and Renault holding 25 per cent each.

Bajaj Auto has been selling scooters and motorcycles across India since 1948. Based in the western city of Pune, it is the second-biggest maker of motorcycles in India behind Hero Honda Motors Ltd.

Bajaj Auto executives say the car will initially be available with a petrol engine, but a diesel is planned.

As world fuel prices soar, other mature Western carmakers are looking at a new generation of low-cost, ultra fuel-efficient small cars.

Chrysler has gone into partnership with Chery in China to build a low-cost car. Toyota, Volkswagen and even Hyundai are looking at low-cost cars in India.