Bajaj, Renault-Nissan finalise venture Low Cost ULC Car

Ending months of uncertainty over their joint project to make an ultra-low-cost car, Bajaj Auto and Renault-Nissan have signed an agreement delineating their roles and fixing 2012 as the year when the car will hit the market.

At an impromptu press conference at the India Economic Summit in New Delhi, Carlos Ghosn, the head of Renault-Nissan, said Bajaj would handle the design, manufacturing and sourcing for the car; Renault-Nissan would look after marketing in India and overseas. “It is much better that we take leadership in marketing and selling of products,” he said.

Interestingly, while most of the talk around small cars since Nano has been about the cost and price, Ghosn has started a buzz around the running cost of the car. “It will be an innovative product,” he said. “The product will be competitive on cost and fuel efficiency. The consumption of oil will be substantially low. It will address both the cost and the running cost.”

Bajaj and Renault-Nissan had announced the formation of a joint venture in May 2008 to develop, produce and market a car code-named ULC.

“Our partnership will continue and we will have a clear definition of who does what. We have no illusion. Our strategy in India is not short-term, but long-term. Renault-Nissan has a 10 per cent share (of the car market) globally. We cannot accept a situation in India where we are just about 1 per cent. We have to adapt to India,” said Ghosn.

The cost to the two companies of the car would be lower than any car produced in the country, Ghosn said. That means the car would be produced at a lower cost than the current Nano, whose price ranges between Rs 1.12-1.85 lakh. However, the price to the consumer of the car may or may not be lesser or greater than the market price to the Nano.

“If current highest mileage of a car is 20 kilometers per litre..then our car is going to do much more than that,” he added.

“Bajaj with 2&3 wheelers is very successful here in the Indian market with its given level of increasing sales and profitability. Renault-Nissan is moving down from a segment of making our four wheelers,” Ghosn said.

Asia, South Africa and Asia would be a part of the exports plan for the ultra-low cost car amongst other targeted emerging markets.

Ghosn said all partnerships in India are ‘going well’ though he has not been able to meet Mahindra& Mahindra officials on his visit here.