Renault head announces a low-cost car for India in 2012

The vehicle is aimed at taking on the world's cheapest car, the Tata Nano, which hit Indian streets earlier this year, as well as building Renault's presence in the fast-growing Indian auto market.

Ghosn, chief executive of the Renault-Nissan alliance, announced a deal had been struck with Bajaj Auto for the car which would be designed and made by the Indian group and marketed by Renault.

“We intend to bring this highly price competitive and fuel-efficient product to the Indian market in 2012,” Ghosn told reporters.

The car was expected to carry the Renault badge.

The two companies first announced they would link up to produce a cheap car in 2008 but since then there have been reports of discord between the partners.

Ghosn said the problems had been ironed out between the two companies at a meeting Monday and “now we are in total agreement.”

Bajaj is a leading Indian manufacturer of two-wheelers and three-wheelers.

The Renault chief would not specify the car's price, but he said when taking into account the running expenses, the cost of the vehicle would be “amazing.”

Renault has said in the past the vehicle's price will be around US$3,000 — more expensive than the US$2,000 Nano, built by India's Tata Motors, which is billed as the world's cheapest car.

Renault has said when taking into account the cost of running the car, it will be a highly competitive rival to the Nano.

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