The world's two largest automakers are working on ultracheap cars to sell in emerging markets and possibly compete with the $2,500 subcompact unveiled last week by India's Tata Motors Ltd - but whether they can match the price remains in question.

During the North American International Auto Show in Detroit, top executives from General Motors Corp and Toyota Motor Corp announced that their companies' engineers are working on low-cost vehicles similar to Tata's Nano. GM has bolstered its engineering staff in India to around 1,000 and also has been working on a low- cost car in other parts of the world, Jim Queen, group vice president of global engineering. GM's Chinese mini-vehicle joint venture, SAIC-GM-Wuling Automobile Co, already is building a car that sells for around $3,500.