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Get ready for another Rs 1 lakh car

Bajaj Auto Ltd and Renault-Nissan will build a $2,500 car in India, which will challenge Tata Motors' Nano as the country's cheapest car.

autos Updated: May 13, 2008 02:13 IST

One more one-lakh car is headed in your direction, and it is official now. Bajaj Auto Ltd and Renault-Nissan, the world’s fourth largest car maker, will build a $2,500 (Rs 1 lakh) car in India, which will challenge Tata Motors' Nano as the country's cheapest car.

The new car, codenamed ULC, or ultra-low cost, will go on sale in 2011, Renault-Nissan and Bajaj said in a joint statement on Monday. Tata Motors has said that its Nano will be available to buyers by Diwali this year.

<b1>Bajaj Auto had unveiled the prototype of a car two days before the Delhi Auto Expo in January 2008, where Tata unveiled its Nano. Rajiv Bajaj, managing director of Bajaj Auto had then said that the car would cost much more than a lakh, and would have a mileage of 34 kilometres to the litre.

The industry is already abuzz with comparisons between the two cars. While the Nano has a engine under the back seat, the ULC will have an engine in front, like other traditional cars.

The final version of Bajaj’s one-lakh car will be ready shortly with the company firming up the joint venture, which will manufacture and market the car. The car would be manufactured in a brand new plant in Chakan, near Bajaj’s existing two-wheeler plant, according to a release. The plant will have an initial capacity of 4 lakh vehicles per year. The Nano plant in Singur, West Bengal, will have a capacity of 2.5 lakh units per year.

Bajaj, India's second- largest motorcycle maker, will own a 50 per cent stake in the joint venture company, and the rest will be equally split between its partners. This would be Renault-Nissan’s second partnership in India after Mahindra & Mahindra for its low-cost sedan, the Logan.

Though the consumer is going to get more choice in low-cost cars, rising petrol and diesel prices may prompt them to shelve their plans for upgradation. "I won’t be going for a car because fuel prices are in the range of Rs 50-60 per litre. I am using a motorcycle, which is giving me a mileage of 60-65 kilometres per litre. Why should I upgrade?" said Rajesh Ittissery, working with a software firm in Navi Mumbai.

However, the industry figures for two-wheelers gives a different picture. India’s motorcycle market, now numbering 4.5 crore, is showing little or no growth. Car sales on the other hand, grew 12 per cent to 12 lakh vehicles in the year ended March 31, 2008, according to the Society of Indian Automobile Manufacturers.