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MUMBAI: While the uncertainty on whether Tata Motors’ Nano would be able to maintain its Rs 1-lakh launch tag continues, the $2,500 small-car from Bajaj Auto and Renault-Nissan could be dearer by at least $500 once it is launched. The car, which is all set to rollout by early 2011, was believed to be priced on the lines of Tata’s Nano, but now, people close to the deal say, the ex-factory price would go up following the hike in steel and crude prices.

Intrestingly, Carlos Ghosn (president and CEO of Renault and Nissan) had earlier stated that Renault was looking for a $3,000 small car in India.

The car code-named ULC was to be rolled out at a price tag of $2,500 for the basic model. Though Tata Motors’ officials maintain that they, too, are facing cost pressures, but would not increase prices. Nissan officials say they are waiting for consumer response to Nano, which is likely to be rolled out in October this year.

That’s when the three companies would be signing MoU, the officials told ET. It was earlier announced that plant for the ultra low-cost car would be set up in Chakan in Maharashtra with a capacity of 4,00,000 units annually. Bajaj Auto holds 50% in the JV while Nissan and Renault hold 25% each.




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“It would be difficult to maintain the cost that we announced in 2008. The final price of the car would be decided only after it is manufactured and rolled out,” said a Nissan spokesperson.

Bajaj Auto MD Rajiv Bajaj, in January, had displayed the design of the low-cost car, which had Bajaj logo on the car. But the Japanese car maker has indicated that it would want to bring in Nissan-Renault’s branding on the car. Industry experts say that a car with a Nissan or Renault logo would be more acceptable in the market.

When Tata Motors launched Indica a decade ago, they had modified the Tata logo to suit consumer perception. Mr Bajaj had indicated that the small car will come in both diesel as well as petrol versions, fitted with a "unique" two-cylinder engine.

In the backdrop of the rising middle-class income in India, the small car sales are expected to touch around 2 million per year by 2010. At present, the small cars make up more than two-thirds of India’s total car sales.