Bajaj changes mind midway on ultra low-cost car

Plans a goods carrier on this platform, no clarity on small car

Singing a different tune from its foreign partners, Bajaj Auto today said it would launch a four-wheeler commercial vehicle in mid-2012 from the ultra-low cost car (ULC) platform, which was originally planned to roll out a car with Franco-Japanese alliance Renault-Nissan.

“By the middle of next year, we will bring a four-wheeler from the ULC platform. For us, this will be a commercial vehicle and it will be a goods carrier,” Bajaj Auto Chairman Rahul Bajaj said.

In the smaller goods carrier space, other homegrown auto majors like Tata Motors and Mahindra & Mahindra are doing very well and the company is looking at that space, he added.

“We are a two-wheeler and three-wheeler maker and we are moving up toward the four-wheeler segment. With the help of our expertise and frugal engineering and Renault-Nissan’s technological expertise, we will launch the vehicle,” he said.

Bajaj also said the foreign partner will “market it (the product from ULC platform) as a car, but not a low-cost car,” and it will be sold at a “mutually agreed price”.

“The platform is same and it will be for four-wheelers. For them (Renault-Nissan), it is a car, while for us it is a commercial vehicle,” he said, declining to comment on whether the two products will be launched simultaneously or not.

Bajaj did not clarify further whether there will be a single product or two different vehicles hitting the roads.

However, differing strongly, Renault said the company has not seen the final product and will not settle down with a vehicle having any shortcomings of a car.

“We are very clear that Renault would only be comfortable with a product that fulfills all the requirements of a car. Nothing short of that will pass our stringent requirements,” a Renault spokesperson said.

Renault will be in a position to take a final call only after an exhaustive review of the final product that Bajaj will show, the official said.

“Till then, it would only be speculation and that is something we would not like to do,” he added. When contacted, a Nissan spokeswoman declined to comment.

The partners had joined hands in 2008 to make a small car with a price tag of $2,500. The ULC was first scheduled to hit the roads in India in 2011, but was delayed due to differences between the partners on pricing and design.

While Renault-Nissan wanted to price the car at $2,500, Bajaj insisted on lowering overall cost of ownership.

In 2010, Renault-Nissan announced the signing of a memorandum of understanding (MoU) with Bajaj Auto to take forward their ULC car project.

According to the MoU, design, engineering, manufacturing and supply base expertise for the ULC would be executed by Bajaj with the support of the alliance, while branding, marketing and selling would be by Renault-Nissan.

Commenting on the nature of the association, Bajaj said: “There will not be any joint venture (JV) to develop the product.”

Last year, Bajaj Auto Managing Director Rajiv Bajaj had said the partners may explore the possibility of entering into a contract manufacturing deal, instead of a joint venture as proposed at the initial stage of the project.

“We can perhaps fulfill our mutual objective through a simple OEM arrangement and without the need to necessarily create a new corporate entity in the form of a JV,” Bajaj had said.

This is in contrast to an MoU signed in May 2008, under which Bajaj was supposed to hold 50 per cent in a joint venture for developing the car, while Renault and Nissan would be the owners of a 25 per cent stake each.