Renault-Nissan developing $2,500 car with Bajaj

The low-cost vehicle segment is heating up as global automakers recognize the potential of selling an affordable car to emerging markets, such as India and China, which comprise over a third of the world's population and is seen as the next boom for the automotive industry. Tata's $2,500 Nano has spurned the likes of Mitsubishi, Toyota, GM and Volkswagen into action to produce their own budget cars for emerging markets, and today Nissan-Renault announced the workings of their own plan to produce such a car.

Renault-Nissan will partner with Indian company Bajaj Auto to build a $2,500 car to compete with the Nano by 2011. Bajaj, one of the major motorcycle manufacturers in India, is engaged in the deal because of the huge growth potential it sees in the low-cost vehicle market. The plan is to entice millions of motorcycle and scooter riding consumers to make the leap to doors and a roof, and Bajaj's 50% stake in the partnership should ensure that the two-wheel business it loses is made up for by its gain in the four-wheel market.

The Renault-Nissan-Bajaj low-cost car will be built at a new billion dollar plant in Western India, and initially the plant will be churning out 400,000 units annually. While currently the primary target for these units is India, other markets around the world, including Eastern Europe and China, will eventually be targeted, reports Bloomberg.

Low-cost cars have been criticized recently due to the lack of safety features they offer, but it seems that safety features are not a major consideration in emerging markets where ultimately the cheapest price attracts the most consumers.

Pictured above is the Nissan Cube minicar, which will be sold in the U.S. in both petrol and all-electric variants by 2010. The Indian low-cost car is expected to be even smaller than the Cube but will still be able to seat four passengers.