Bajaj-Renault-Nissan small car plan languishes

The Bajaj-Renault-Nissan alliance's small car project continues to get sidelined, as plans of production and branding are yet to take shape.

The alliance has already pushed back the launch deadline twice over the last three
years.

According to the initial plans for the ultra low-cost small car, the vehicle
was slated to hit Indian roads this year, followed by an international foray in the
ensuing year.

But due to delay in implementation of plans, the launch date was deferred to 2011, before the management decided to reschedule it again to 2012.

All three companies are engaged in their individual plans and this has lead to a delay in finalising the production plans of the small car.

While Bajaj Auto is engaged in defending its market share in the two-wheeler segment through the launch of a variety of motorcycles, Renault and Nissan are busy with their upcoming Rs 4,500-crore (Rs 45-billion) mega plant in Chennai. Both companies are also charting out dealer expansion and marketing strategies.

While the design, engineering, sourcing and manufacturing of the low-cost car (Project name -- ULC) will be handled by Bajaj Auto, marketing and selling will be done by the Renault-Nissan alliance.

Bajaj Auto had not finalised any production plans yet, despite the launch of the car being less than two years away, Managing Director Rajiv Bajaj told Business Standard in a recent interview.

Bajaj Auto wants the manufacturing plant of the unnamed car to be at Chakan (Pune), next to its two-wheeler facility. It requires 350 acres to set up the facility and out of this, about 250 acres have been acquired.

"We have three options. There is land granted to us at Chakan, which is attractive, as it is close to our head quarters, so implementation is better that way. At Aurangabad, the land, building and utilities are already available and in Uttarakhand, based on the benefits on offer.

Since the tax benefits over there are withdrawn, there is the option of approaching the government for that. We are studying on which of this makes the best sense overall," Bajaj had said.

Kiminobu Tokuyama, managing director and CEO, Nissan India, said, "We are to yet finalise on the production plans of the Bajaj car. No decision has been taken yet."

Meanwhile, Renault, which has the crucial job of branding the low-cost car along with its partner, Nissan, said it would not badge the car using its name, if the product fell short of its requirements.

"Renault's branding will totally depend on the look and feel as well as on the performance factor of the ULC. The company will not agree to branding if these issues are not met," said an executive at Renault India.

Last November, Renault-Nissan's chief Carlos Ghosn, one of the most recognised automotive CEOs globally, had said that marketing and selling activity of the ULC would be the sole undertaking of Renault and Nissan.

The brand under which the car will be sold will be selected by the Renault-Nissan alliance, since Bajaj Auto was not interested in branding the car, as the Pune-based company's brand is stronger in the two- and three-wheeler categories.