Bajaj auto ltd, India’s leading two wheeler manufacturer finally set to put an end to its venture of developing an ultra low-cost mini car for the Renault- Nissan alliance. The project, which is expected to challenge Tata’s Nano, the world’s cheapest car, is finally dropped with the remarks of the Managing Director saying “we don’t intend to get into the low-margin business”. The new car is said to have 70 to 80 percent of its parts in common with those used in scooters, motorcycles and three-wheeler for reducing the cost of production.
The Memorandum of Understanding (MoU) of the project of innovative small car was signed by the alliance in November, 2009. According to it, the design, engineering, manufacturing and supply-base expertise to create this all-new product will be executed by Bajaj with the backing of the Alliance. The marketing and distribution in India and overseas will be dealt by the Alliance, with the support of Bajaj.
The project gained much value after its alliance with Renault-Nissan. But the Bajaj-Renault-Nissan alliance had differences of opinions right from the start. While Renault-Nissan wanted the price of the mini car to be around $2500, Bajaj wanted the price to be less. Their relation weakened when Renault started raising concerns about the quality of the product. It stated that it cannot put its reputation at stake by associating itself with a sub standard product. It was said also that the executives always had different voices about the proceedings of the venture. Right from the beginning Renault remarked that the product should fulfill all the requirements of car while Bajaj always described it as a four wheeler and not as a car.
Finally, the mini car which was expected to hit the roads of India stopped mid way with Bajaj terminating the venture saying it is commercially “unviable”.
After the termination of the creation of the mini car, Bajaj is likely to continue the alliance with Renault- Nissan is still on. “Bajaj Auto will remain in the commercial space of the business while Renault-Nissan, if they decide to go ahead with the project, will be responsible for the personal transportation application,” says S Ravi Kumar, Bajaj Auto’s senior vice-president for business development.
Instead of the mincar the Bajaj Company says it will launch a four-wheel light commercial vehicle. The company says that the model of it will be showcased at Delhi in January, 2012. The firm will work for this four wheeler commercial vehicle on a new platform.
Rahul Bajaj, explained that the new commercial vehicle can be used for carrying goods as well as carrying passengers. The company is planning to manufacture the vehicle at their factory at Aurangabad, where they manufacture their two-wheelers. He said that it will debut in Sri Lanka and Bangladesh and later in other global markets.
When approached for the comments Nissan Spokesman Simon Sproule said that the partners would be facing certain milestones in the decision making process for the project in the next few weeks while Renault could not be reached for comment.