Volkswagen, Suzuki plan small car for India-paper

BANGALORE, Dec 11 (Reuters) - Germany's Volkswagen and Suzuki Motor plan to develop a new small car that would cost between $4,300 and $5,400 for the Indian market, following this week's tie-up between the firms, the Economic Times reported on Friday.

Suzuki is the parent of Maruti Suzuki, India's leading passenger car maker, and the new car could replace the best-selling Alto model, the Indian firm's chairman told the newspaper.

'At some point we will need a replacement for the Alto. That price range is the entry level for Indian customers today, so we can't leave that segment open,' R.C. Bhargava told the business daily.

The paper said the car would be priced between 200,000 and 250,000 rupees, about double the price of Tata Motor's Nano, the world's cheapest car which was launched earlier this year.

Under a deal announced this week, Volkswagen will buy a one-fifth stake in Suzuki for $2.5 billion, tapping the Japanese firm's expertise in small cars and dominance in India as VW seeks to become the No. 1 automaker.

Officials at Volkswagen and Suzuki Motor could not immediately be reached for a comment on the newspaper report. A spokesman for Maruti Suzuki in India did not respond to phone calls when contacted by Reuters for a comment.

The Economic Times said the planned new car would be priced at $4,000-$5,000 in the European market, well below the $8,800 price tag for the Up, the cheapest car in Volkswagen's stable.

'Volkswagen will be greatly interested in a car below the price segment of the Up ... and that is something we will need to check in our future together with Suzuki,' Fabian Mannecke, the spokesman for Volkswagen, told the newspaper.

Mannecke said Volkswagen was not targeting the Nano segment.

($1=46.6 rupees)

(Writing by Sumeet Chatterjee; Editing by John Mair)

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