just-auto.com

INDIA: Bajaj and Alliance cool on budget car plan

By just-auto.com editorial team | 15 July 2011

Bajaj Auto has told Dow Jones Newswires that it has dropped plans to develop an ultra-low-cost car with the Renault Nissan Alliance.

The project, to bring a budget car, priced around US$2,500, to the Indian market by next year was announced in 2009 but there have been rumours in recent months of differences between the partners.

Bajaj was to design and make the car with the Alliance providing marketing and sales support.

Dow Jones reported that Rajiv Bajaj, managing director of Bajaj Auto, said that the motorcycle and three-wheeler manufacturer does not now intend to get into the low-margin passenger car business.

He added Nissan and Renault chief, Carlos Ghosn, had been informed. Bajaj told him the plan was "unviable" and Ghosn agreed.

In June, Renault India managing director Marc Nassif told AFP that the Alliance would only move ahead with the project if the quality of the product "matches our DNA."

If not, the group would "do something different," he added, underlining that Renault had made no investments in the project.

A Renault spokesman said the company had no immediate comment on Bajaj's announcement.

Instead of the low-cost car, Bajaj said it would instead unveil a low-cost commercial vehicle at the New Delhi show in January.