The country's second largest two-wheeler company had announced a tie-up with Renault and Nissan in to develop an ultra-low cost small car for India. Bajaj’s prototype of its low-cost car has been developed on a new platform called LITE, the Pune-based company’s common platform for all four-wheelers, including compact light commercial vehicles. The prototype of the low-cost car is expected to be launched by 2010.

Bajaj claims that the car will set a new benchmark in terms of fuel economy and offer twice as much as the current crop of small cars. The chassis of the new car will focus on maneuverability and make it useful for intra-city transportation. The platform and the engines and transmission will be commonalised between the new ultra-compact and the new LCVs.

Small car sales, which make up more than two-thirds of India's domestic market, are expected to nearly double to 2 million units a year by 2010, helped by rising middle-class incomes. The car will take two to four years to make and come in both diesel as well as petrol versions, will be fitted with a “unique” two-cylinder engine. Its gear system, too, will be unusual. Bajaj declined to give a specific price of the small car. Ghosn has earlier stated that Renault was looking for a $3,000 car in India

The car will be manufactured at Chakan, near Pune. The plant, which is being built with an initial capacity of 250,000 units, will also produce the light trucks, which Bajaj expects to launch in 2009. However, keeping its focus intact on the two-wheeler segment, BAL plans to unveil five models this year. While, the two will be an upgraded version of XCD and Discover, the third will be a 125cc scooter called Blade.

Here is a video of Bajaj Lite shot at Auto Expo 2008.

We found it on You Tube.