A bumpy ride ahead for Bajaj's low-cost car

Bajaj Auto's ultra low-cost car project may have a bumpy ride ahead, with partner Renault India still to take a final call on branding and marketing the vehicle.

"We have not seen the car being developed by Bajaj. We will take a decision on whether to partner on branding and marketing the vehicle only when we see the final product. The product being developed by Bajaj has to be a car for us to go ahead with the agreement," said Jerome Stoll, executive vice-president (sales & marketing) at Renault.

According to a 2008 agreement, Renault and Nissan will brand, sell and market the Bajaj car.

However, launch of the vehicle has been postponed twice in the last three years. The project has faced several delays on branding, pricing, distribution and marketing.

Bajaj Auto MD Rajiv Bajaj declined to comment on Stoll's statement. In an emailed response, Bajaj said, "I have no comments at this stage."

Renault's take on the ultra low-cost car project comes at a time when the French automaker is preparing to independently develop a small car for the Indian market.

Renault has a technical centre in Chennai manned by 1,500 people and has set up an engineering & design studio in Mumbai.

"The ultimate directive for the engineering & design studio is to understand consumer preferences and come up with a car for the Indian market," said a senior executive at Renault's local unit. The product will then be customised for markets such as Brazil and Russia.

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Renault's car will be priced and positioned above the Bajaj vehicle and manufactured at the Chennai facility with an indigenisation of around 85 per cent.

"The Indian automobile market is set to sell over 6 million vehicles by 2020. The potential here is huge. We want to offer the right products at the right value, and establish ourselves as a key player here," added Stoll.

Renault joins the ranks of global automakers like Toyota, which last month unveiled the Etios sedan exclusively for the Indian market.

To be introduced in hatchback variant Liva, the Etios family is expected to double Toyota's sales to 140,000 units in 2011.

Toyota's cheapest offering is intended to target India's mass market and is pitted against market leader Maruti Suzuki's Swift compact and DZire sedan.

Bajaj's vehicle is expected to be priced at under Rs 2 lakh and a mileage of 30 km a litre has been promised. Bajaj Auto has a 50 per cent stake in the joint venture with Renault and Nissan, while the foreign partners hold 25 per cent each.

The deadline for commercial introduction of the car in the domestic market has now been set for the end of 2012, with Rajiv Bajaj recently saying that development of the vehicle is on track.

Renault has firmed up plans to introduce five cars in the Indian market over the next two years.

They include the Fluence sedan, Koleos sports utility vehicle and a yet-unspecified premium hatchback. The French automaker is eyeing a 5 per cent share of the Indian market by 2014.