Bajaj Auto, Renault and Nissan will sign a formal agreement next month for making their proposed small car in India which is scheduled to be launched by 2011.

The car codenamed ULC is said to challenge Tata's Nano which is expected to launch in October and is priced at around Rs. 1 lakh.  The car will have most of the features of the concept car that was displayed at the Auto Expo in January.

The car will be priced at $ 2500 (Rs. 1.03 lakh) which will include excise and other levies, but excluding VAT, octroi, sales tax and local municipal tax.

The three companies will shortly sign a Memorandum of Understanding (MoU) with the Maharashtra Government for the plant which will come up in Chakan near Pune. The car will be manufactured at the new plant which has a capacity to manufacture 4 lakh units annually.

While a major part of the concept and development of the car will be done in India, key inputs in critical areas of product development such as design, powertrain and chassis will be incorporated from Renault-Nissan's global R&D centres.