Renault-Nissan inks deal with Bajaj for ultra-cheap car

The Renault-Nissan alliance said Thursday it has signed an agreement with Indian automaker Bajaj Auto to make an ultra-low cost car to be sold in India and other emerging markets.

The car, scheduled for a launch in 2012 plans to rival the world's cheapest car - the Nano - being produced by India's leading vehicle maker Tata Motors.

The design, engineering, sourcing and manufacturing of the unnamed new model will be handled by Bajaj Auto, the country's leading motorbike and rickshaw maker.

Marketing and selling will be done by the Renault-Nissan alliance.

Bajaj Auto, which unveiled a snubnosed prototype of the car in 2008, has a 50 percent stake in the venture while Renault and Nissan have 25 percent each.

"The main structure of the deal announced last November remains unchanged," a Bajaj Auto spokesman said on Thursday.

The car is likely to hit the road in 2012 and may be priced at 2,500 dollars (117,500 rupees).

The Nano costs between 2,660 and 3,900 dollars across dealer showrooms but can be bought from the factory gates at the 100,000 rupee (2,130 dollar) price tag.

Car sales have been robust in Asia's third-largest automobile market in recent months, driven by new models, government stimulus efforts and generally rising incomes.

India is emerging as a popular destination for foreign auto makers, as growth in western developed markets has dwindled in recent years.

Small car sales are the highest and represent more than two-thirds of India's market, driven by rising middle-class incomes.

Japanese car maker Nissan is to launch its Micra small car next week in capital New Delhi, which is being produced from a plant in the south co-owned with Renault.

In April, Renault pulled out of a joint venture with Indian car manufacturer Mahindra and Mahindra which produced its first car for the growing South Asian market, the Logan.

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