Nov. 10 (Bloomberg) -- Renault SA, France’s second-largest carmaker, and affiliate Nissan Motor Co. will introduce their ultra-low cost car a year later than planned because of delays in fixing details of the product with its Indian partner.

Bajaj Auto Ltd., India’s second-largest motorcycle maker and the 18-month-old project’s local partner, will now be responsible for designing, engineering and making the car, which will go on sale in 2012, Renault Chief Executive Officer Carlos Ghosn told reporters in New Delhi today. The car will be priced at about $3,000, he said in a Bloomberg-UTV interview today.

The automobile, code-named ULC, would take on Tata Motors Ltd.’s 123,360 rupees ($2,650) Nano, the world’s cheapest car, as manufacturers introduce low-priced models in India to attract the nation’s 50 million motorcycle users. Boulogne-Billancourt- based Renault and Yokohama, Japan-based Nissan, which already work together in India, said in May 2008 that they were teaming up with Bajaj to introduce the ULC within three years.

“We’ve a clear strategy now and we’ve a clear definition of who does what,” Ghosn said today. “From time to time, we will face challenges with our partners, and this is normal.”

The companies originally targeted a $2,500 starting price for the ULC, which was to be made starting in 2011 at a factory to be constructed in Chakan in western India, near Bajaj’s existing motorcycle plant. Pune-based Bajaj would hold 50 percent of the venture, with the rest equally split between the two foreign partners, and initial planned capacity would be 400,000 cars a year.

Bajaj’s Engineering

“We needed an entry-price point,” which should “be around $3,000 because it is an entry price point already taken by some of the competitors,” Ghosn said in the interview. “We will not be able with our own product planning and our own engineering to do something like this,” so the partners are turning to Bajaj.

The model will be positioned as having “one of the lowest prices of the market and one with the lowest running cost,” Ghosn said. “The fuel efficiency of this product will be second to none.” The Renault-Nissan team will be “opening up all our technology” to back the project, he said.

Renault suspended India investment plans in a separate venture with Nissan last year, saying spending will resume when the economic growth and auto sales revive. The companies originally planned to invest 45 billion rupees at a new plant in Chennai by 2015. Gross domestic product increased 6.7 percent in the year ended March 31, the weakest pace since 2003.

Logan Sales Decline

Renault sells the Logan sedan in India with partner Mahindra & Mahindra Ltd. The joint venture’s sales plunged 48 percent to 13,423 units in the fiscal year ended March 31, according to the Society of Indian Automobile Manufacturers.

“We cannot just accept the situation where in India we represent less than 1 percent market share,” Ghosn said today. “That’s absolutely out of the question.”

India’s automobile market may triple to 6 million vehicles in 10 years, Ghosn said.

“The train is leaving the station now and you want to make sure that you have the products on line and the capacities are coming,” he said. “India has already taken off in terms of the car market business.”

To contact the reporter on this story: Subramaniam Sharma in New Delhi at ssharma@bloomberg.net; Tushar Dhara in New Delhi at tdhara1@bloomberg.net.

Last Updated: November 10, 2009 13:07 EST