Bajaj on track to launch small car in 2012

The small car initiative from Bajaj Auto, India’s second-largest two-wheeler maker, has been received well by the company’s French partner, Renault. According to a senior company executive, the low-cost car, codenamed ULC, is scheduled to be launched in 2012.

This comes as a shot in the arm for Bajaj Auto, as its small car project had been mired in controversy over issues like branding, pricing and even distribution and marketing, which is to be handled by the Renault-Nissan combine.

While Bajaj Auto claimed development work on its small car, which it prefers to call ‘passenger 4-wheeler’, was going on despite the controversies, it has cost a two-year delay for the three companies.

“There has been considerable development on the four-wheeler so far. Last month, Renault executives were here, and we have shared all the work with them, be it styling, prototyping and testing. In fact, we have heard from them, after they went back to France, that they are satisfied. So, we have said 2012 (for the launch) and we are on course,” Bajaj Auto Managing Director Rajiv Bajaj said.

Renault, France’s second-largest car maker, and Nissan, Japan’s third-largest car manufacturer, had agreed to handle the marketing and sales activities of the small car, besides lending a brand to it, as Bajaj had shown disinterest in branding the car.

However, both the foreign companies run by the common boss Carlos Ghosn had stated they were not bound by any agreement on branding and that it would be done only if the “low-on-cost” small car met their requirements, especially in crucial areas like the overall look and feel and performance.

While Renault is appointing dealers and setting up distribution channels on its own, Nissan has outsourced this responsibility to a third party, Hover Automotive, which is appointing dealers and outlets for Nissan.

Bajaj Auto and the alliance of Renault and Nissan had signed an understanding in 2008 for a 50:50 joint venture, with the foreign partners holding 25 per cent each. The small car will be priced below Rs 2 lakh. This would make it expensive than the Nano, which is priced at Rs 1.45 lakh (ex-showroom, Mumbai).

According to sources, a final prototype of the car should be meeting testing requirements by next year before the fully developed version of the car hits the market by late 2012. Launch date of the car had to be postponed twice in the past three years due to a number of hurdles.

Bajaj did not comment on the amount of investments gone into developing the small car till date. The automobile industry is expecting an escalation in cost pertaining to the delay in development. However, Bajaj insisted that the loss was not actuarial and only on the number of units sold less.

The Pune-based company, which has segment leadership in the premium bike space, has promised to deliver a mileage of 30 kilometres to a litre of fuel, although technical specifications of the car are not yet disclosed.

At the 2008 Auto Expo in New Delhi, when Tata Motors had unveiled the Nano, Bajaj Auto had showcased a five-door small car. Early this year, Bajaj had stated that development of the car’s engine was complete and was done in partnership with Renault and Nissan.