India's Bajaj to Miss 2011 Deadline for Low-Cost Car
The Bajaj-Renault-Nissan ultra-low-cost car project will miss its 2011 deadline. Bajaj Auto managing director Rajiv Bajaj has ordered that the work done so far on the project be scrapped and has demanded major modifications on design, positioning and other details, according to a person familiar with the development.
The Bajaj-Renault-Nissan team, which has worked for more than a year to finalise the project details, will now go back to the drawing board and start from scratch. A person with knowledge of the development said the project could be delayed by more than a year due to the snags as well as financing problems at Renault's end.
When contacted by ET, Mr Bajaj refused to comment. Renault COO Patrick Pelata at the recent Geneva Motor Show admitted that the Bajaj Auto MD was unhappy with the design and positioning of the proposed ultra-low-cost car. A Renault India official said the project would be delayed by at least five to six months.
Although both partners have not gone on record with it, there have been differences in the vision for the ultra-low-cost car. While Renault-Nissan CEO Carlos Ghosn was looking for a price warrior to take on the Tata Nano, Mr Bajaj wanted to give a better value-for-money car which would offer better performance and mileage, if only at a slightly higher cost than the Nano.
The latest delay will be on top of the earlier finance-related delay that the project was facing. Renault-Nissan has already been ‘going slow' on the project as part of an overall slowdown in overseas investments. The Renault spokesperson had then told ET that the "current investment climate is such that nearly all projects are running slow, including the ultra-low-cost car."
When the tie-up was announced last year, Bajaj was in charge of power train, platform development and supply lines whereas Renault-Nissan was supposed to chip in with design and engineering. Bajaj showcased a prototype at the Auto Expo in January 2008 and Mr Bajaj had said the ultra-low-cost car project would take cues from the prototype, though the design and engineering work would be all fresh.
The global slowdown has impacted sales of car companies, and automobile MNCs are cutting back on their investments and product plans for India. Japanese car major Honda, for instance, has announced it will slow down its new factory under construction in Rajasthan, and instead roll out its Jazz small car from its existing factory in Surajpur, UP.