Two trends recently - small cars with a premium and small cars for small budgets. The MINI and its many versions, the Fiat Abarth, and a host of other small cars pack the punch for a price. Toyota has recently just announce their price bumps which included their fleet’s small car, the Yaris. A while back, Tata has decided to shake things up with a budget people car coming in the $2,000 price range.

I am quite confused as to which direction the small car market will go but Tata might just make a killing with such an ultra-budget car. Hyundai is trying to give the Nano a run for its money by pushing forward safety issues. Still, I’m pretty much sure that depending on the market demand for these small budget cars, these companies will be forced to try to create the best compromise between size, performance, cost, and safety. And this recent announcement by Renault seems to be promising - a $2,500 budget car that is also aimed to compete with the Nano.

Mr. Rajiv Bajaj, Managing Director of Bajaj and Mr. Carlos Ghosn, President and CEO of Renault and President and CEO of Nissan, today announced they will form a joint-venture company to develop, produce and market the car code-named ULC with wholesale price range starting from 2500 USD. The new joint-venture company will be 50% owned by Bajaj Auto, 25% by Renault and 25% by Nissan.

Targeting the growing Indian new vehicle market, the ULC will be made at an all-new plant to be constructed in Chakan (Maharashtra state) in India. Initial planned capacity will be 400,000 units per year. Sales will start in early 2011 in India, as a primary market, with growth potential in other emerging markets around the world.

Source: Renault-Nissan Alliance