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Bajaj unfazed by Nissan, Ashok Leyland plans

 

A day after Nissan, Japan’s third-largest car maker, stated that Chennai-based truck maker Ashok Leyland Ltd (ALL) could partner it in developing affordable compact cars in India, its original partner, Bajaj Auto, said on Wednesday that this would not derail its own ultra low-cost (ULC) car project.

Bajaj is developing a compact hatchback from scratch, which is slated to hit the market in 2012. The development work for this vehicle – such as engineering, design, sourcing and manufacturing – is being solely done by Bajaj Auto. Branding and marketing would be by Renault and Nissan.

Rajiv Bajaj When queried about Nissan’s plans on engaging a third company for building a car, which may sell in the same space as Bajaj Auto’s proposed car, Managing Director Rajiv Bajaj said: “(Nissan’s plans with Ashok Leyland) are irrelevant as we are creating a completely different category.”

The Pune-based bike maker has also ruled out holding any talks with the Japanese giant on the matter, according to Bajaj. A statement from the company explained: “The ULC project between Bajaj, Renault & Nissan on the one hand and the ‘price centric $4,500-5,000 car’ ((Rs 2.07-2.30 lakh, for which Nissan is reported to be looking at partners in India) on the other are non-overlapping and, hence, non-conflicting”.

Nissan keen on compact cars
Nissan is looking to develop a range of compact cars for the Indian and overseas market – mainly China, Latin America and Africa – along with ALL. The company targets a price in the lower band, which would essentially compete with Maruti Suzuki’s Alto.

Although no formal agreement has been signed between the companies, Nissan is very keen on roping in ALL, despite the fact that the truck maker had no experience in car manufacturing.

Though marketing and selling activities for the Bajaj ULC would be carried out by Renault and Nissan in not just the Indian market but in international markets as well, Bajaj maintained that Nissan’s new plans would not impact its overseas plans for the ULC.

Bajaj Auto is banking heavily on the export market for making the low-cost car a profitable business venture, as volumes from the Indian market alone would not be sustainable. The company would, therefore, tap into the large dealer base of Nissan and Renault, spread across the globe. Bajaj’s small car is targeted in the space between the Tata Nano and Maruti’s Alto. However, Renault officials had stated earlier that, in terms of size, the Bajaj ULC would be smaller than the Alto. But, Rajiv Bajaj has maintained that the unique selling point of the car will be its superior mileage and not the price, that was earlier pegged at $2,500 (Rs 1.15 lakh).

Keeping the retail price of the low-cost car under Rs 1.2 lakh will be a tough challenge for Bajaj Auto, as prices of all key raw materials have surged 30-40 per cent over the past eight-ten months. Besides, Tata Nano is also reportedly making minor modifications to the Nano’s utility, with further versions like a diesel one being planned.