The country's second largest two-wheeler maker Bajaj Auto Ltd (BAL) has joined hands with auto major Renault-Nissan to launch a small car in India by 2011.

The new JV company will be 50% owned by Bajaj Auto, 25% by French car maker Renault and 25% by Japan-based Nissan.

The company would initially invest Rs 1,000 crore in the venture to develop, produce and market the car, code-named ULC (ultra-low cost) with wholesale price ranging from $2500. The new car from Bajaj and Renault-Nissan JV will challenge Tata Motors’ Nano as the country's cheapest car.

The car manufacturing plant would be setup in Chakan, Maharashtra and it would have an initial production capacity of four lakh units per year. Bajaj Auto had stated its plans to offer cheap car to Indian consumers even before the launch of Nano.

The company claims that the sales will start early in 2011 in India, the primary market, and will later expand to other emerging markets around the world.