The battle is intensifying to develop, manufacture and sell low priced family cars to meet the burgeoning demand from consumers in emerging markets. Renault and Nissan announced today that they are entering into a joint venture with the India firm Bajaj Motors to jointly build a $2,500 car to compete with Tata Motors’ Nano mode. A new 400,000 capacity plant is being built in Chakan, Maharashtra and the aim is to bring the car to the market in 2011.

It represents another shift away from maturing markets in rich western economies where demand is stalling amid rising fuel prices and economic uncertainty. The low-priced car is possible not simply because of the much lower labour costs in India but also on account of the relative abence of tough CO2 emissions and safety standards which are now standard in the EU for example. The final entry level price for the new car will depend on the future direction of steel and other component prices. But the prospects for rising car ownership in India still look good. The world’s biggest car producer Toyota reported in April 2008 that it was building a second plant in Bangalore to build a car expected to sell for less than $10,000.

More here from The Times “Renault-Nissan team up with Bajaj Auto in rival to Nano car”

Renault in India