Bajaj Renault And Nissan Joint Venture To Launch Ultra Low Cost Car By 2012
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Nissan-Renault and Bajaj Auto JV has finally come to a conclusion to launch the Tata Nano rival. Bajaj has decided to provide parts from its company’s scooters, bike and three-wheelers that will result to bring down the project cost for the new car from Rs 1500 crore to Rs 200-300 crore.
Bajaj has earlier said it will produce 400K units of ultra low cost car (ULC) per year at a new plant and now changed. “I don’t have a number as yet but my estimate is that it would be closer to around 20% of the earlier investment figure due to common product aggregates and common facilities,” Bajaj Auto MD Rajiv Bajaj told.
Bajaj Auto has a 50% stake in the JV while Nissan and Renault have 25% each. “There is excess capacity in the global car market. Our thinking was that if the ULC is a standalone project, it will be vulnerable to business cycles. We decided to de-risk the project by leaning on our motorcycle and three-wheelers for its platform and aggregates. Around 70-80% of the internal components should be common,” said Mr. Bajaj.
Mr. Ghosn, the CEO of Nissan-Renault, had on Tuesday announced that the ULC will not be branded Bajaj. That prompted Rahul Bajaj, chairman, Bajaj Auto, to say: “I will do what I want in my company. Mr. Ghosn does not have any stake in my company.” Rajiv Bajaj explained that his father was referring to the freedom that the agreement offers Bajaj Auto to crank out its own products from the ULC platform.
“There is nothing in the discussion or the agreement that stops us from using those same aggregates to make two, three or four wheelers of our choice,” Mr. Bajaj said. “But it’s not in our interest to make an overlap product. I would want a four wheeler for commercial applications.” A four-wheeler or light truck will in fact roll out in the market a little earlier the ULC’s planned 2012 launch.
As for the ULC, it will compete head on with the Nano. Offering details of the project, Mr. Bajaj said: “The mileage will be way over 20 km per litre. We will target 30 km per litre. To target a two wheeler upgrader, you have to attack monthly cost of ownership.” Motorcycles cost only Rs 2500/month while cars cost Rs 9000-10,000 per month.
[Source: Economic Times]
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Posted: November 12th, 2009 under Cars.
Tags: bajaj low cost car, bajaj nissan renualt ultra low cost car, bajaj ultra low cost car
