Bajaj-Ghosn JV to give Nano a race

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Mumbai, New Delhi, May 12: Two-wheeler manufacturer Bajaj Auto, together with France’s Renault SAS and Japan’s Nissan Motor Company, will float a joint venture (JV) company to develop, produce and market a low-priced car codenamed ULC in India by 2011. The starting price of the car will be $2,500, akin to Tata Motors’ Nano, unveiled early this year.

Bajaj Auto will hold 50% in the JV, while Renault and Nissan will hold 25% each. The trio will also set up a new plant at Chakan in Pune for the car. The companies refused to disclose the investment for the new plant.

“We (Renault-Nissan) will provide the know-how while Bajaj will bring the knowledge of Indian customers and the automotive industry,” said Simon Sproule, corporate VP, global communications, Nissan. This project will be managed separately from the Renault-Nissan alliance project in Chennai. However, the alliance plans to use engineering resources from the Chennai development centre for the ULC project.

Sproule added that the price of the car may be revised by 2011 with the integration of new regulations such as Euro IV emission regulations and macroeconomic evolutions such as steel and other raw material prices.

An analyst with Angel Broking, said, “Tata Nano will definitely have the first mover advantage and will define this new segment in the automobile industry.” “We will be signing the memorandum of understanding (MoU) by June,” said S Ravikumar, VP, business development, Bajaj Auto. “We have already acquired 250 acres of land for the plant that will have an initial production capacity of four lakh units per year.”

The small car market in India is hotting up with all global players, including Honda Siel Car India, General Motor India and Ford Motor India, planning to manufacture small cars in the country. While, Honda’s small car offering is expected to hit Indian roads in 2009, GM has gone on record saying that the company would come up with a product that will be priced lower than its existing small car Spark.