Bajaj and Renault to produce Nano rival

A low-cost car aimed at the growing Indian middle class, available to the consumer at a cost of approximately Rs 1 lakh - where did we hear that before?

Following the media storm created by Tata's Nano car, car makers around the world have been working on similar offerings for the Indian domestic car market which is predicted to boom in coming years on the back of India's growing economy and increased consumer wealth.

In fact, accourding to media sources, Indian car sales are predicted to reach $145bn by 2016!

Car-makers Renault-Nissan and India's largest producer of motorbikes, Bajaj, are now second in line to announce plans for a low cost car, which is set to cost the Indian consumer approximately Rs 1 lakh.

A joint venture which will be 50% owned by Bajaj Auto, 25% by Renault and 25% by Nissan, the car will be available in petrol and diesel options and is so far named 'ULC', which probably stands for 'Ultra Low Cost' car.

The ULC will be manufactured at Bajaj's plant in Maharashtra, India, and with India as the primary market, the JV plans on producing 400,000 units per year with growth potential in other emerging markets around the world.

The ULC will be tough competition to Tata's Nano, which has captured the imagination of the Indian population.

The four door five-seater car has a 33bhp, 624cc engine, no air conditioning, no electric windows and no power steering, but its price tag of Rs 1 lakh promises to fulfill the dreams of lower income families for who owning a car has now become an affordable option.

While the Bajaj-Renault-Nissan JV remains tight-lipped about details of the ULC, South Korea's Hyundai and General Motors are also said to be working on a low cost car project.

Analysts predict rich dividends for the Indian automobile industry, but environmentalists worry about the mounting air pollution in India's traffic heavy metropoles.

The ULC will hit Indian roads by 2011, giving Tata's Nano a head start of almost 2 years.