French auto major Renault and Bajaj Auto have agreed to price the ultra low cost (ULC) car that they are jointly developing with Nissan at USD 2,500 (around Rs 1.10 lakh) to take on Tata Nano.

“In India, Renault and Nissan are developing an ultra low cost vehicle with the Bajaj group, benefiting from its expertise in the light vehicles and the knowledge of the Indian market. We are aiming for a price of USD 2,500,” Renault President and CEO Carlos Ghosn said at the Annual General Meeting of the company on Friday.

When asked if this is the agreed price range, Bajaj Auto Managing Director Rajiv Bajaj replied in the affirmative.

The partners have, thus, solved the tricky issue of pricing, which has been widely speculated as the reason for the delay in the project announced in 2008. While Renault wanted a low cost car, Bajaj was keen on a car that would have high mileage and low maintenance.

Originally, the car was scheduled to hit the market this year, but that has been postponed to 2012. It will take on Tata Nano, which is currently available in a price range of Rs 1.23 lakh-1.72 lakh (ex-showroom Delhi) for three variants.

Last year, during his India visit Ghosn had announced finalisation of the project and said “as per the agreement, the design, engineering, sourcing and manufacturing will be handled by Bajaj Auto, while marketing and selling will be (done) by Renault-Nissan Alliance.”

He, however, had declined to comment on the pricing of the car.

Officials of the alliance had said that the car will be smaller than Maruti Suzuki’s Alto, which is the biggest selling model in India.

The three partners of the ULC project have been struggling to find engineering solutions to produce such a low cost product.

In March this year Nissan Motor Co Executive Vice-President Collin Dodge had said, “It is over two years that Bajaj is trying to produce the car. The physics of it is very difficult. We have not yet found a solution as there are a lot of engineering solutions required.”

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