Nissan-Bajaj small car plan on; Bosch opts for 5-day wk

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New Delhi/Bangalore: Japan’s Nissan Motors said that its small car project with Bajaj Auto is on track, despite the slowdown in demand for compact cars.

The company, though, is assessing the market potential. “We are checking the visibility of the market. Our first priority is to maintain cash flow,” said Shouhei Kimura, chief executive officer, Nissan Motor India, while inaugurating the Nissan Technology and Design Square.

Compact cars, which include Maruti Alto, Wagon R, Swift and A Star, Hyundai Santro, Getz and i10, Chevrolet Spark and U-VA, Tata Indica, Skoda Fabia, Ford Fusion and Fiat Palio, constitute over 70% of the total passenger cars sold in the country.

The segment has been witnessing a dip in sales over the last three months, owing to high interest rates and unavailability of funds. According to the Society of Indian Automobile Manufacturers, compact car sales fell by 21.2% in November last year at 60,983 units as compared to 77,359 units in the corresponding month in 2007. Consequently, the overall passenger car sector registered a dip of 19.4% at 83,059 units in November 2008 vis-à-vis 1,03,031 units during the same month in 2007.

At the beginning of 2008, Nissan Motor and its French partner Renault had entered into a joint venture with Indian motorcycle maker Bajaj Auto to produce a minicar in India by 2011. The joint venture would be 50% owned by Bajaj Auto, 25% by Renault and 25% by Nissan.

While car companies across the globe continue to be optimistic about demand bouncing back in the Indian market, globally, all players are facing liquidity crunch as sales have fallen steeply amid the worst global financial crisis in 80 years. Consequently, Hyundai Motor said on Friday that it plans to cut production.

“We decided to reduce production by 25-30% at all our domestic factories, except two lines for small cars, in the first quarter,” Jake Jang, a Hyundai spokesman said in a telephonic interview.

Nissan Motor, too, recently said it that will delay the start of light commercial truck production with its Indian partner Ashok Leyland by six months to as late as September 2011 in view of plunging truck sales in India. The joint venture had been planning to begin production during the business year starting in April 2010, with 80% of output slated for sale domestically.

Even Bosch, the global auto component major, has decided to adopt five-day a week working schedule at its primary manufacturing plant in Bangalore to offset the slowdown.

In a filing with BSE on Friday, Bosch Ltd said that the company will adopt a five-day week at the Bangalore plant from January 19 to till the end of February 2009. The company will also suspend some of the manufacturing operations at its Bangalore plant from January 15 to January 17, 2009.

In addition, the German auto component major said it that will suspend manufacturing of starters and generators and related activities at the Naganathapura plant on the outskirts of Bangalore on various dates from January 10 to January 31, 2009.

Bumpy ride?

• Nissan is assessing the market potential

• Priority is to maintain cash flow