Mumbai, July 28: French carmaker Renault and Bajaj Auto today confirmed they had opened preliminary talks to suss out business opportunities but stopped short of confirming mounting speculation that they planned to build a small car.

“Bajaj Auto and Renault are in preliminary deliberations to jointly understand customer requirements and business potential for very competitive vehicles in India,” the two companies said in a joint statement.

Renault had already said it was interested in developing a small car priced at $3,000 (around Rs 1.2 lakh), which could mount a serious threat to Tata Motors’ model that is due to roll out of its Singur plant next year.

“If concluded favourably, this can lead to a long-term partnership between Renault and Bajaj for the development of the business so conceived,” the statement added.

A couple of weeks ago, Bajaj Auto told shareholders that it was seriously assessing a cheap four-wheel option.

Back in June, Renault announced that it wanted to come out with a low-cost car that would be more competitive than the Logan, a mid-sized sedan that Renault jointly manufactures with Mahindra and Mahindra (M&M).

Renault appears to have decided to go with Bajaj Auto — the country’s second biggest two-wheeler maker — to develop the small car, which could take about three years.

Last week, Renault opened a design centre called Renault Design India. It will handle initial project design to a final mock-up of a vehicle, the company had said. In April, Renault CEO Carlos Ghosn had said the French carmaker was looking at several projects in India, including one in Chennai, where it could forge a three-way alliance with Nissan of Japan and Mahindra and Mahindra to make cars.