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| NEW DELHI: A joint venture between Nissan-Renault and Bajaj Auto, which plans to launch a low-cost car to compete with the Tata Nano, will have 70-80% of its parts in common with those used in the Pune-based company’s scooters, motorcycles and three-wheelers. This will result in the project cost for the new car being pared down from Rs 1,500 crore to around Rs 200-300 crore. In May 2008, Bajaj, Nissan and Renault had announced plans to manufacture 4,00,000 ultra low cost (ULC) cars per year at a new plant, which would have cost Rs 1,500 crore. Nearly all aspects of that earlier agreement have 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 ET. 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 derisk 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. Announced in 2007, the project experienced turbulence over branding and product detail. This summer, Rajiv Bajaj went on record to say he had asked for all the work done on the project to be scrapped. He wanted major modifications on design, positioning and other details. The new concept that his team came up with has now met with Carlos Ghosn’s approval, following which an announcement was made on a fresh agreement between the partners. Mr Bajaj said the proposed car will not be branded ‘Bajaj’. The equity holdings in the company making the low-cost car may also change. “We did not revisit that figure, so as of now the 50:25:25 JV is valid, but when we sign the contract that may change,” Mr Bajaj said. 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. |
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Originally Posted by jalsa777
(Post 1579987)
According to an article by the Economic Times, 70-80% of internal parts of the Bajaj-Renault small car are to be common with existing bajaj 2-3 wheelers. |
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