Bajaj was to develop the car under its expertise of 'frugal engineering', which would then be badged by Renault-Nissan and sold through the latter's network. However, by 2012 Renault had opted out of the tie-up.
VG Ramakrishnan, managing director, South Asia at Frost & Sullivan, said that the market for a low-cost car may hardly exist today but will likely develop over the next four to five years when buyers of bikes and second-hand cars start taking the segment seriously as an alternative.
ďIt is tough to get features, fit and finish at the price point. For success in the low-cost car segment, it really depends on how you position the product Ė there is an image problem, you can't sell it just as a cheap car,Ē he said.
The Chennai plant is the first joint production facility in the world for the Renault-Nissan alliance, well known as a manufacturer of low-cost cars with brands such as Datsun and Dacia under its fold. In fact, the Logan (now sold as the Mahindra Verito) and Renault Duster are actually both sold under the Dacia brand in Europe, positioned below Renault's price range. Nissan's Datsun brand is also expected to be launched in India by 2014 with three entry models.
With an investment of about Rs 4,500 crore and a strategy to make India an export hub for low-cost and small cars, the Chennai facility is now close to reaching its 400,000-unit annual production capacity. With several new volume models on the way, the group expects to double annual output to 800,000 units by 2016-17. This entails a new facility, for which it has held initial talks with Gujarat government officials.
* To develop a car in the sub-R2 L category
* To place it between Nano and Alto 800
* Plans another car in price range of R3.6 L
* To take on WagonR, Estilo, i10 & Santro