Japanese autocar giant Nissan, which is already partnering Bajaj and Renault in developing an ultra low cost car, announced on March 2 that it was in talks with Ashok Leyland for developing a small car for the global market that could be priced at around $4,500-5,000 (about Rs 2.25 lakh-2.50 lakh).

"We have a formal agreement with Ashok Leyland for making light commercial vehicles in India...in addition to that we also use Ashok Leyland's engineering services for various purposes. At the moment we are talking to them and many other partners in China, Indonesia...for a price centric vehicle," Collin Dodge, Nissan Motor Co's executive vice-president told reporters at the Geneva Motor Show here.

Dodge said the small car is aimed at tapping the price bracket of $4,500-5,000. This price segment is expected to account for "around 20% of total global car sales in due course of time". Nissan and Renault had announced a tie-up with Bajaj Auto in 2008 to produce a car priced at $2,500, but Dodge conceded, "The physics is very difficult. We have not yet found a solution as there are lots of engineering solutions required."

Speaking about localization to reduce prices, Dodge said none of the big global carmakers could produce a small car at such a cheap price without partnering with local firms already engaged in low-cost production. Asked which would be the main markets for the proposed $5,000 car, he said, "China will be the number one in this segment with about two million units while India should be at number 2".