Hyundai is working on developing its low-cost small car which will take on Tata's Nano and other micro-car from other companies like General Motors, Toyota, Renault-Bajaj, Fiat and Volkswagen. The new small car will be launched in 2-3 years in India.

The Company is serious about the micro-car market and will undertake a massive feasibility study to understand the Indian customers' mind, driving conditions, styling cues and technical specs for the proposed small car.

The Company is planning a petrol car which will be a notch above the Nano segment. It will be price-competitive and is targeted exclusively for the Indian market.

Hyundai has also decided to make India its sole small car manufacturing hub and has shifted its small car R&D to its Hyderabad centre. Work on the new car project has started and initial computer-aided designing and technical analysis is already on.

The final product will be jointly researched and developed by the Hyderabad centre and Hyundai's global R&D headquarters at Ulsan in Korea.

Though the car is primarily for India, it will also meet the demand of other emerging markets. The Company will gauge the response to Nano and will develop the product accordingly to set the next aspiration level.

The car is expected to be much cheaper than Santro (Rs 2.65 lakh ex-showroom Delhi) and will be priced around Rs 1,80,000 to Rs 2,25,000.

The Company is increasing its R&D headcount four fold for the small car project to 800 engineers and researchers from the current 200.