Renault plans $3,000 car for Indian market

Renault says it is considering producing an ultra-low-cost car, to be manufactured in India and aimed primarily at that market as well as other rapidly expanding emerging economies.

Annual car sales in India are expected to nearly double to two million by 2010 - approaching the size of the UK market in volume terms - with small cars making up more than two-thirds of the market.

Renault declined to confirm reports in the French press that the new vehicle would be priced at or below $3,000 (£1,500). "We are indeed thinking about a car that's more competitive than the Logan," said Renault spokeswoman Axelle de Ladonchamps, declining to give further details.

The Logan was launched three years ago and was Renault's first attempt at such a modern-but-no-frills design. Its low price - it sells at around $8,000, against an early, overambitious, target of $5,000 - is down to three factors which could easily be replicated for the smaller model.

First, it shares its basic chassis design or "platform" with the Renault Clio and the Nissan Micra, so offering economies on design and tooling.

Second, the materials and components used are lower grade and more simple than those found in most Western models. The latest electronic stability aids, soundproofing, safety kit and other extras are mostly omitted. Third, assembly has been allotted to low-cost nations, mainly Romania (by Renault subsidiary Dacia) and India (by partner Mahindra), but also Russia, Iran, Colombia, Brazil and Morocco.

The success of the Logan, which is sold in some European markets, will have encouraged Renault to take the concept to another market segment. Up to the end of last year, a total of 321,284 Renault/Dacia Logans had been sold, with production running at about 200,000 units a year.

Still higher volumes could be achieved with the new small car, and Renault has an agreement with Mahindra for a plant in southern India to roll out up to 400,000 vehicles per year, starting in mid-2009.

The new Renault/Dacia/ Mahindra supermini would compete with the ageing Fiat Palio and its replacement. It is unlikely to make it to Europe, not least because it would probably do badly in crash tests.