Nissan Plans $3,000 Car For India

Nissan CEO Carlos Ghosn has big plans for the Indian market, where he plans to launch a small car with a rock-bottom sticker price under $3,000.

“If you want to be serious in India, you should not cross the $3,000 figure,” Ghosn, who is also the CEO of Renault (other-otc: RNSD - news - people ), told reporters at Nashik in west India.

Nissan will be in a race to the bottom of the price charts with Indian automobile maker Tata Motors (nyse: TTM - news - people ). Next year, it intends to bring a car to market that will sell for 100,000 rupees ($2,300), making it by far India’s -- and the world's -- cheapest car. (See: " The Next People's Car")

It hopes to entice the country’s 45 million drivers of scooters and motorcycles to step up to a larger vehicle.

Small cars account for three-quarters of automobile sales in India, which is Asia’s fourth-largest automobile market.

The cheapest car in India at present is the Maruti 800, which sells for about $4,500. Maruti, which has about 50% of the Indian car market, is controlled by Japan's Suzuki Motor.

Ghosn, whose Renault and Nissan (nasdaq: NSANY - news - people ) partner with Mahindra and Mahindra here, said it is difficult to succeed at low-cost manufacturing without an India base. “There is something unique about the frugality in engineering and management here that we would like to learn from.”

Ghosn was in India this week to launch a plant that will produce Renault’s economy Logan car, which it developed for Eastern Europe and other developing regions.

Last month, Ghosn announced he was giving up oversight of Nissan’s North America’s operations to focus on getting the company’s finances back on track (See: “ One Less Job For Nissan’s Ghosn”). Nissan had announced in February that it wouldn’t meet its targets for this fiscal.

“The Logan production has commenced a month ahead of schedule and at 15% lower than projected costs,” he said.

Mahindra Renault’s Nashik facility has a capacity of 50,000 vehicles a year. Logan is difficult to make in high-cost European markets, so India is the best choice, Ghosn said. The base model of the gasoline-powered version of Logan will cost $9,700 here, and the diesel version will retail for $12,400, Mahindra Renault said in a statement.

Logan, one of Renault’s most profitable cars, is now made mainly in Romania.

Foreign carmakers including General Motors (nyse: GM - news - people ), Volkswagen, Hyundai and Toyota (nyse: TM - news - people ) are making a concerted push into India, which is seeing fast economic growth but still has a tiny number of drivers compared to developed countries.

Mahindra Renault and Nissan are investing $900 million to build a production plant in the south Indian city of Chennai. The plant, which will be ready in the second half of 2009, will have the capacity to manufacture about 400,000 vehicles, including the Logan.