Friday, November 13, 2009

Renault small car not to have Bajaj tag; delayed by 1 yr



Even as the Bajaj Auto-Renault tie-up for the ultra low cost car remains intact, the Indian partner will only design and manufacture the vehicle, which will be branded under the French partner's name. The low cost car project has also been delayed by a year and is now scheduled to be launched in 2012 instead of the earlier planned 2011.

These developments took place at a meeting between Renault-Nissan alliance head Carlos Ghosn and Bajaj Auto Managing Director Rajiv Bajaj Monday. "He (Rajiv Bajaj) said he had no interest in branding of the car. He told me he wanted to instead focus on his two and three-wheeler business and I respect his decision," Ghosn said while briefing the media today on the meeting. The project would be entirely Bajaj Auto's doing except for the marketing part which would be done by the Renault-Nissan alliance, he said. "The design, engineering, manufacturing and sourcing of the product will be done by Bajaj with the support of Renault-Nissan alliance. When it comes to marketing and selling the product, this would be done by Renault-Nissan under a brand which will be selected by Renault-Nissan," Ghosn said at the India Economic Summit, organised by the World Economic Forum.

This is a significant step as, after almost two years of joint development, the project had run into rough weather on issues related to branding. Rajiv Bajaj had, in fact, gone on record to say there were issues related to branding and the product itself after which he had even ordered the work done to be scrapped. Ghosn said both parties have now been able to define their respective roles in the ultra low cost car project. "We intend to bring this highly-price competitive and fuel efficient product to the Indian market in 2012," Ghosn said adding most of the investment in the project would also be determined by Bajaj Auto as it would be manufacturing the car. "This four-wheeler that we are going to bring, we will share a lot of components and will share a lot of manufacturing capacity from the three-wheelers, so there is an economy of scale that is substantial, and a lot of the suppliers also will be common. So there is a common interest into making this a reality," he said. Asked whether both parties intended to ink a formal joint venture agreement for the project, Ghosn said as of now both parties have signed a contract through which the plan would be carried out. "If need be we can also sign a joint venture agreement. We are fine anyways," he said. Ghosn said the car would be an entry point for Renault and Nissan branded vehicles in India and help create awareness and acceptance of the two brands in the country. "We had no illusions when we came to India that we would get it right the first time itself.

Our strategy is not short-term, we want to have a substantial market share in this market," Ghosn said. Not elaborating whether the two parties have been able to decide on a price point, he said the proposed car would have the least running cost in the Indian market. Ghosn had Sunday said Renault is not fixated on the USD 2,500 price point. "It could be USD 2,500 or USD 2,800 or even USD 3,000. We are not fixated with a price point," Ghosn had said. He said the proposed vehicle is very important for the Renault-Nissan alliance as there is a huge market for such a vehicle not only in India but also overseas. "We would also export the vehicle. There are a lot of emerging markets, which have similar issues as India. There are a lot of markets in Africa, South America, Asia and the countries surrounding India," he said. . INDIA PLANS Ghosn said the Renault-Nissan alliance's upcoming Chennai plant would begin production from March with an initial capacity to roll out 200,000 units a year. "I would be coming back to India in March for the production and inauguration of our plant in Chennai," he said. The Chennai plant would make cars for both the brands in India. The first product to roll out from the plant would be Nissan's maiden small car in India. "With the global meltdown behind us, everyone is lifting their investment freeze decisions and so have we. We would make a prudent decision on investing in the second phase of the Chennai plant," he said. On Nissan's alliance with Ashok Leyland to manufacture light commercial vehicles in India, Ghosn said the plan is on track and the products would be rolled out from the latter's existing facility. He also said the Renault and Mahindra & Mahindra alliance would correct its strategy in India to boost sales. Renault and Mahindra & Mahindra sell the entry-level sedan Logan in India and have been witnessing depleting sales recently mainly due to lack of products. "Renault's presence in India is not limited to one single product. We would be analysing the situation and reposition the vehicle," he said. During his visit to India, Ghosn has had meetings with all his partners here--Ashok Leyland, Bajaj Auto and Mahindra & Mahindra

source: moneycontrol