Hyundai joins race to develop ultra-low cost vehicle

Hyundai has confirmed it will enter the burgeoning ultra-low cost vehicle market with the announcement that it’s planning to launch a small car for the Indian and Chinese car market by 2011, or 2012. The car will have a relatively low price tag to attract customers in the two rapidly growing markets, which combined comprise over one-third of the world's population and thus present a critical opportunity for carmakers.

Hyundai is hoping to sell the car for around $3,500, which would make it slightly more expensive than Tata's upcoming $2,500 Nano car and Renault-Nissan's ultra-low-cost car that is arriving by 2011. When asked about how Hyundai sees itself competing against ultra-low-cost cars from Tata and Renault-Nissan, Hyundai's Indian managing director, H.S. Lheem, told Automotive News that his company doesn’t have any immediate plans to compete in the Nano’s $2,500 price range.

Research and development for the new small car will take place in both South Korea and southern Indian cities Hyderabad and Chennai. Hyundai already sells a small car in India under the designation of the 'Santro' (pictured), but the South Korean manufacturer is certain that there’s demand for a smaller model, not only in India but in other countries as well. While the Tata Nano may be cheaper than the upcoming small Hyundai, the Lheem insists that the car will attract customers with extra frills the Nano won't be able to offer.

The list of carmakers in this future segment has grown significantly since the reveal of the new Nano, and includes the likes of Mitsubishi, GM, Toyota, Renault-Nissan and India’s Tara.