Bajaj car to be world's cheapest

Bajaj's ultra-low cost car being manufactured jointly with Renault and Nissan promises to give hot chase to the Tata Nano. On Monday, Rajiv Bajaj (BAJAJAUTO.NS : 2101.05 0), MD, Bajaj Auto confirmed the $2,500 (Rs 1.1 lakh) price tag for the car, announced first by Renault chairman & CEO Carlos Ghosn at the company's shareholders' meet late last week. The Renault announcement comes a few days after it pulled out of its loss-making Logan venture with Mahindra & Mahindra.

The Bajaj car will be cheaper than the Nano, which comes at Rs 1.23 lakh-1.72 lakh (ex-showroom Delhi ). After the launch of Tata Nano, the race for the No.2 position in the ultra-low cost car segment is under way in India , which as emerged as the Mecca of this segment. However, other automakers' plans to enter this segment are still on the drawing board.

At Renault meeting, Ghosn said: "In India , Renault and Nissan are developing an ultra-low-cost vehicle with the Bajaj group, benefiting from its expertise in light vehicles and knowledge of the Indian market." He reiterated the affordability of the vehicle for the Indian market by citing the targeted low price tag.

"We are combining our strengths with Nissan, notably in India , Russia , Brazil and Mexico ," Ghosn said. "The alliance product strategy has been finalised in India and Russia , and Renault and Nissan will pool their production capacities and platforms there to fully deliver on these developments," he added.

The car was initially scheduled to hit the market this year, but has been postponed to 2012. Bajaj Auto displayed the prototype of the small car at the 2008 Auto Expo. However, the three partners were stuck at various levels of branding and engineering the car till last year. According to industry observers, the project also got delayed as partners were stuck on pricing issues as well. While Renault wanted a low-cost car, Bajaj was keen on a car that would sport high mileage and low maintenance.

It was during his India visit that Ghosn finally announced the finalisation of the project. "As per the agreement, the design, engineering, sourcing and manufacturing will be handled by Bajaj Auto, while marketing and selling will be (done) by Renault-Nissan Alliance," he said. But he had declined to comment on the pricing of the car.

Officials from the alliance have said the car will be smaller than Maruti Suzuki's Alto, which is the biggest selling model in India .

In March, Collin Dodge, executive vice-president, Nissan Motor had said: "It is over two years that Bajaj is trying to produce the car. The physics of it is very difficult. We have not yet found a solution as there are a lot of engineering solutions required." Nissan is also in talks with Hinduja group company Ashok Leyland (ASHOKLEY.NS : 62.45 +1.5) to develop a small car for the global market that could be priced around $4,500-5,000.

"We have a formal agreement with Ashok Leyland for making light commercial vehicles in India . In addition, we also use Ashok Leyland's engineering services for various purposes. At the moment, we are talking to them and many other partners in China , Indonesia ...for a price centric vehicle," Nissan Motor Co executive vice-president Collin Dodge had said at the Geneva Motor Show in March.

Source:http://in.biz.yahoo.com