Korean car brand Hyundai wants to take on Tata and Dacia by selling a new car for under £1,800 in India.

The carmaker, already second largest in India, has announced that it will launch the small car by 2011.

Hyundai Motor India said it has "no immediate plans to take on Tata’s Nano" but is "planning a new small car keeping in mind consumers’ demand in India as well as China".

It is unlikely that the car will come to Europe's markets.

Tata is planning to start production of the world’s cheapest car, the Nano, by this year-end.