A concept of the One-Lakh Car made by Tata. The company says it will be the world's cheapest car. image:36384:0::0

DigitalJournal.com citizen journalist, Bart B. Van Bockstaele, wrote an article in January about India's Tata Motors Ltd. announcing a $2,500 car called "Nano", the cheapest car in the world. Tata will begin selling the Nano by end of this year.

Renault, Nissan and Bajaj now plan to do the same, releasing a similar car by 2011.

The car is named “ULC“ (Ultra Low Cost). Renault and Nissan together will have a 50 per cent stake and Bajaj will have the remaining 50 per cent in this project. Until now, Bajaj produced motorcycles and scooters only.

There are nearly 45 million motorcycle and scooter owners in India, and so auto makers are hoping they will trade in their bikes for a ULC. Passenger car sales are expected to triple by 2015 according to the Indian Government. Bajaj wants to capitalize on this opportunity with ULC.

The ULC will be made at an all-new plant to be constructed in Chakan in western India, near Bajaj's existing motorcycle plant. They initially plan to produce 400,000 vehicles per year with India as the main market, but also sell overseas in emerging markets.

Tata Motors’s Nano has a price tag of 100,000 Indian Rupees ($2,383) for dealers. This price is almost half the price of Suzuki’s Maruti 800, the most inexpensive car currently in India.

Business analysts estimate Nano will create new consumer demand, selling at least 200,000 vehicles by March 2010.

Renault and Nissan plan to enter into India’s market to boost sales of their own cars. Renault is currently selling the Logan car in India with Mahindra & Mahindra Ltd, while Nissan imports its cars.

Renault and Nissan will also build a $1.1-billion factory in Southern India to make new car models.

In India, for every car there are six motorcycles or scooters in the country, and the economy is picking up and growing steadily, so there will be more car buyers in the future.