On a budget Issue 870, by Abigail Whittaker

Plans have been announced for the world’s cheapest car which is expected to be on sale by 2011
A joint venture between Renault-Nissan and the Indian firm Bajaj Auto looks set to produce the world’s cheapest car at just $2,500 (£1,276).

Last Monday the firms announced plans to make the budget car, which is expected to cost 100,000 rupees in India, by early 2011.

Bajaj’s managing director Rajiv Bajaj said: “The car will offer twice the fuel economy of the existing products in the market.”

His firm, which will own 50% of the venture, are aiming to achieve 34 kilometres (21 miles) per litre of fuel.

The main market for the car, known only as Codename ULC, will be in India.

The ULC will be produced in a factory that is set to be built in Chakan, western India, and will eventually manufacture 400,000 units a year.

For Bajaj, the Renault-Nisan partnership represents a turn into new territory.

The company is India’s second largest motorbike maker and the leading manufacturer of three-wheelers, but is yet to build a passenger car.

The venture is expected to rival Tata Motor’s Nano, which was unveiled earlier this year and billed at the time as the world’s cheapest car.

Tata said that their car could be ready for sale by September and plans to market it for around $2,500.

The Nano has made purchasing a vehicle in the country a realistic prospect for many people who had previously not been able to afford one.

The four-door five-seater car has no air conditioning or electric windows, though deluxe models will be on offer.

But environmental critics have expressed concerns that the car will lead to mounting air and pollution problems on what are already clogged roads.

Domestic and international car manufacturers are now racing to corner India’s small-car market, which accounts for over two-thirds of domestic sales in the country of 1.1 billion people.

Experts have pointed out that India could serve as an Asian export base for small cars and car sales there are predicted to more than quadruple to $145bn by 2016.

This is the second effort to make a cheap car for South Asia’s rapidly growing middle class.