Renault-Nissan Says Ultra Low-Cost Car Will Be Built by India's Bajaj

By Steve Herman

New Delhi
10 November 2009


The boss of the automakers Renault and Nissan has announced the companies will team with an Indian partner to launch the most affordable car in the country.

It appears the world's cheapest car, the Tata Nano, launched this year in India, will soon get some competition.

Speaking to reporters Tuesday, Carlos Ghosn, the chief executive of Renault and Nissan, revealed the French and Japanese automakers have agreed to work with Bajaj Auto to introduce a new ultra low-cost four-wheeled passenger vehicle in 2012.

"I am practically sure that the cost of this car will be lower than any other car made today in India," Ghosn said.

Ghosn also says the new car will have the best performance on the market for a production conventional engine in terms of kilometers per liters of fuel consumed.

Bajaj, a maker of motorcycles and three-wheeled taxis, known as auto rickshaws, is to design and build the new car with assistance from the French company, which is to market and sell the vehicle in India and abroad under the Renault/Nissan brands.

The car, not yet named, will compete with Tata's Nano, which hit Indian roads this year and sells for little more than $2,000. General Motors of the United States and Toyota of Japan have also previously announced plans to launch, within the next couple of years, small passenger cars in India.

Renault-Nissan next year is to open a passenger car factory in the southern Indian city of Chennai with a capacity to make 400,000 vehicles a year. But the new joint venture small car is to be made at a Bajaj plant near Pune, in western India.

The French-Japanese automaker ranks in the top four globally, accounting for a 10 percent market share. But its success in India has been more modest, trailing most competitors.

Ghosn calls sales here of its Logan brand mid-sized sedan, a money-losing joint venture with domestic automaker Mahindra, not up to expectations.

"We cannot just accept a situation where in India we represent less than one percent market share," he explained. "That is absolutely out of question. We have to adapt to the Indian market. We have to adapt to the product that the Indian people want. We need to bring what the people want exactly in the kind of performance that they are looking for, both in terms of product, in terms of technology and in price and in term of [fuel consumption]."

Ghosn is bullish on the future of India's automotive sector, with a population of more than one billion people, but where annual new car sales are around two million vehicles. The Renault Nissan top executives predict the number of autos sold in India will triple in 10 years as more of India's 50 million motorcycle owners move from two wheels to four.