After Tatas, Bajaj teams up with Renault-Nissan to build Nano-age cars

NEW DELHI/ Pune, MAY 12: As Tata Motors readies for the launch of its $2,500 Nano, the world’s cheapest car, later this year, its first bonafide competitors Bajaj Auto Ltd and Renault-Nissan today announced their own plans for a $2,500 car. The vehicle, codenamed ULC, would be produced by 2011 as a joint venture (JV) between Bajaj and Renault-Nissan. While Bajaj will have a 50 per cent stake in the JV, Renault and Nissan will have 25 per cent each.

A statement from Bajaj said that the car would be rolled out from a brand new plant in Chakan, Maharashtra, and would be positioned for exports to other markets too. “Bajaj MD Rajiv Bajaj and Carlos Ghosn, President and CEO of Renault and Nissan, today announced they will form a joint-venture company to develop, produce and market the car, code-named ULC, with a wholesale (dealership) price range starting from $2,500,” it said. The statement did not, however, specify the planned investment in the JV. Tata Motors is investing approximately Rs 2,000 crore for its Nano venture.

The Nano, which was unveiled during the auto expo earlier this year, is awaiting an October roll-out with the process of identifying dealerships and bolstering the service network underway. Tata Motors will will have an initial Nano capacity of 2.5 lakh units per annum at its Singur plant while the ULC will have a 4 lakh initial capacity. “We have already acquired 250 acres of land for the plant, which would have an initial production capacity of 4 lakh units per year,” said Bajaj Auto vice-president (business development) S Ravikumar. “While the car is primarily being designed for India, there are many similar markets where there could be good export potential. We will tap that potential at an appropriate time.”

A prototype of the ULC was showcased during the auto expo and the car is expected to dish out higher than industry fuel economy. “The pricing of the car has not been decided yet and we do not wish to make that its USP. Instead, it will have other technological innovations like class leading fuel efficiency and an all new transmission system, incorporating the best of existing manual and automatic transmissions as its USP,” Bajaj Auto MD Rajiv Bajaj had said, hinting that the car would run twice the distance of an average car in the country today for one litre of fuel. While the Nano and ULC will create a new segment of low cost cars in India, it is likely to eat into the country’s huge used car market which is estimated at nearly 1.5 million vehicles — 120 per cent the market size of new cars. Further, this segment is also likely to hit the two- and three-wheeler industry, which is currently one of world’s largest at over 60 million units per annum.

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