Bajaj Auto, Renault-Nissan team up to rival Tata's small car Nano

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The venture, 50 percent owned by Bajaj Auto, 25 percent by French group Renault and 25 percent by Japanese automaker Nissan will develop a car code-named ULC (ultra-low-cost-) which will hit the roads in 2011.

Initially, around 400,000 cars will roll out from the production line and output will be increased according to market response, a Bajaj official said. Depending on its success in India, the car will also be introduced in other emerging markets, the official said.

"Targeting the growing Indian new vehicle market, the ULC will be made at an all-new plant to be constructed in Chakan in India. Initial planned capacity will be 400,000 units per year. Sales will start in early 2011 in India, as a primary market, with growth potential in other emerging markets around the world," a joint release said.

"The feasibility has already extended into Joint Product Development and the project is on line to meet targeted performance and cost," it added.

"India is a strategic market for the future of Nissan," said Carlos Tavares, executive vice-president, Nissan Motor Co. "Not only is there tremendous potential, but Nissan is well-positioned to play a key role by delivering attractive, affordable vehicles to Indian consumers."

Tata's Nano, which received an overwhelming response during its launch early this year, is set to hit the roads later this year.

Besides Renault-Nissan, other carmakers have expressed interest in developing and marketing the small car in India.

Toyota Kirloskar Motor (TKM), the automotive joint venture between Japan's Toyota Motor Corp. and India's Kirloskar Group announced last month that it will invest Rs.1400 crore ($350 million) on a new plant in Bangalore from where it will roll out its small car in a bid to tap the largest segment of car market in India.

The Indian small car market is dominated by market leader Maruti Suzuki, which controls over 50 percent of the market. However, in January, Tata Motors challenged its leadership by unveiling its ultra low-cost car Nano. Tata's Nano and the popular Indica are expected to be pitted against Maruti Suzuki's small car offerings - Alto, Maruti 800, Wagon R and Zen. Keeping pace is South Korea's Hyundai Motors, which has tasted success with its Santro and the new i10 models.

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