Bajaj Renault Nissan had earlier announced to launch an ultra-cheap car in India by 2011. However, the project seems to be delayed now and the car is expected to miss its scheduled deadline as announced earlier.
According to the news, Ravi Bajaj, Managing Director, Bajaj Auto has ordered that all work done for the project is to be scrapped. He has also asked major modifications in the car’s design and other aspects. This means that the technical team will now be developing the car again from the scratch.
However, there is no official confirmation from Bajaj on these rumors doing rounds in the market. A Renault India official said the project would be delayed by at least five to six months. There are reports also that the partner companies also have difference of opinion on the vision for the car. While Renault Nissan wants the car to have a competitive price against Nano, Bajaj MD wants the car to be better value for money
Wednesday, March 18, 2009
Bajaj small car takes high mileage route
Bajaj Auto’s ultra low cost (ULC) car, scheduled to hit the roads in 2010-11, is expected to deliver on-road mileage of over 30 km a litre, according to top sources involved with the project. The vehicle will roll out of a new plant in Chakan near Pune.
The company believes that this will be the most important differentiator in this price segment of Rs 1.5 lakh where the car will be pitted directly against the Tata Nano, scheduled to be launched on March 23.
Since this is a platform, there will be more than one version with different price points going beyond the basic level of Rs 1.5 lakh (on-road). It is expected to have both petrol and diesel options, unlike the Nano which will kick off with a petrol version while the diesel will follow in end-2010.
The Bajaj team handling the ULC project is, apparently, convinced that doubling mileage is more important than halving the price. This has stemmed from Bajaj Auto’s own experience in the past when the once robust market for the Chetak scooter literally shifted overnight to motorcycles, which were dearer but much more fuel-efficient. “The idea is to work on this car with the mindset of a motorcycle,” sources said.
The ULC project was conceived as a three-way alliance where Bajaj would hold 50 per cent equity with Renault and Nissan accounting for 25 per cent each. However, in a statement signed by the Managing Director, Mr Rajiv Bajaj, on Saturday, the message was clear that the company would go it alone if the other two were to back off.
Primary responsibility
“Bajaj is proceeding as before to implement this project and any financial or other constraints that Renault-Nissan may have will have no bearing on the ability of Bajaj to implement this project,” it stated. It added that the company would have “primary responsibility for the design, development, manufacturing, and supply chain activities of this project”.
Speculation has been rife that Renault is having second thoughts about its participation though its Chief Executive Officer, Mr Carlos Ghosn, is particularly passionate about the ULC project as it fits in with his pet theme of “frugal engineering.”
On the other hand, Mr Bajaj has gone on record to say that the way forward for such a project is to find creative and profitable solutions rather than look for sub-optimal alternatives.
Suppliers involved with Bajaj Auto’s two-wheeler business will have a big role to play, which will go a long way towards keeping costs in check.
At the time of finalising the joint venture with Renault and Nissan, the company had said that the initial capacity at the plant would be four lakh units annually. Whether this will be revised in the backdrop of the economic slowdown and the prospects of a slow revival, remains to be seen.
The company believes that this will be the most important differentiator in this price segment of Rs 1.5 lakh where the car will be pitted directly against the Tata Nano, scheduled to be launched on March 23.
Since this is a platform, there will be more than one version with different price points going beyond the basic level of Rs 1.5 lakh (on-road). It is expected to have both petrol and diesel options, unlike the Nano which will kick off with a petrol version while the diesel will follow in end-2010.
The Bajaj team handling the ULC project is, apparently, convinced that doubling mileage is more important than halving the price. This has stemmed from Bajaj Auto’s own experience in the past when the once robust market for the Chetak scooter literally shifted overnight to motorcycles, which were dearer but much more fuel-efficient. “The idea is to work on this car with the mindset of a motorcycle,” sources said.
The ULC project was conceived as a three-way alliance where Bajaj would hold 50 per cent equity with Renault and Nissan accounting for 25 per cent each. However, in a statement signed by the Managing Director, Mr Rajiv Bajaj, on Saturday, the message was clear that the company would go it alone if the other two were to back off.
Primary responsibility
“Bajaj is proceeding as before to implement this project and any financial or other constraints that Renault-Nissan may have will have no bearing on the ability of Bajaj to implement this project,” it stated. It added that the company would have “primary responsibility for the design, development, manufacturing, and supply chain activities of this project”.
Speculation has been rife that Renault is having second thoughts about its participation though its Chief Executive Officer, Mr Carlos Ghosn, is particularly passionate about the ULC project as it fits in with his pet theme of “frugal engineering.”
On the other hand, Mr Bajaj has gone on record to say that the way forward for such a project is to find creative and profitable solutions rather than look for sub-optimal alternatives.
Suppliers involved with Bajaj Auto’s two-wheeler business will have a big role to play, which will go a long way towards keeping costs in check.
At the time of finalising the joint venture with Renault and Nissan, the company had said that the initial capacity at the plant would be four lakh units annually. Whether this will be revised in the backdrop of the economic slowdown and the prospects of a slow revival, remains to be seen.
Renault-Bajaj small car to be totally different
Despite Bajaj Auto’s claim that the prototype of its small car will closely resemble the actual one when it is ready for launch and that Renault’s engagement in the project would primarily be on the technical and manufacturing aspects, the French automotive company said that the jointly developed product would be totally different.
“What Bajaj has done is their desire and intention. They have been working on this since long. But after the feasibility talks get through, it will be a totally different car if we make it together,” said Mr Sylvain Bilaine, Managing Director, Renault India.
Renault also said that it remained committed to India, despite Mahindra pulling out of the tripartite joint venture with Renault-Nissan. It stated that it would invest Rs 4,000 crore at its plant in Chennai that would produce 400,000 cars by 2010.
Technical, design centres
The company also said that its technical centre in Chennai, which would employ 1,500 people, would be operational by July at an investment of Rs 50 crore.
Currently, the company is in the process of setting up a design centre in Mumbai which is expected to be ready by the end of March. This would look into various aspects of styling, said Mr Bilaine.
The company showcased its Twingo, a trendy small car and Laguna sedan as well as its Formula 1 car. However, the company does not intend to launch these in the domestic market.
“What Bajaj has done is their desire and intention. They have been working on this since long. But after the feasibility talks get through, it will be a totally different car if we make it together,” said Mr Sylvain Bilaine, Managing Director, Renault India.
Renault also said that it remained committed to India, despite Mahindra pulling out of the tripartite joint venture with Renault-Nissan. It stated that it would invest Rs 4,000 crore at its plant in Chennai that would produce 400,000 cars by 2010.
Technical, design centres
The company also said that its technical centre in Chennai, which would employ 1,500 people, would be operational by July at an investment of Rs 50 crore.
Currently, the company is in the process of setting up a design centre in Mumbai which is expected to be ready by the end of March. This would look into various aspects of styling, said Mr Bilaine.
The company showcased its Twingo, a trendy small car and Laguna sedan as well as its Formula 1 car. However, the company does not intend to launch these in the domestic market.
Bajaj-Renault-Nissan to drive small car by 2011
Cost’ car of the Bajaj-Renault-Nissan combine, which will compete with Tata’s Rs 1-lakh car, will be on the road by 2011, partners of the joint venture announced on Monday.
Code named ‘ULC’ (ultra low cost), the small car will be made at a new plant at Chakan in Maharashtra, with an initial annual capacity of four lakh units.
Bajaj Auto will hold 50 per cent stake in the joint venture while both Renault and Nissan will hold 25 per cent each, a press release issued jointly by the partners said. The partners were unwilling to divulge investment details. However, the initial investment is expected to be around Rs 1,000 crore.
The ‘wholesale’ price range of the car will start from $2,500 (Rs 1.05 lakh), said the release. However, Nissan’s spokesperson said the ‘retail’ price may be higher.
“We are targeting a very competitive price. From now to 2011, the price may change with the integration of new regulations such as Euro 4 emission regulations and macroeconomic evolutions such as steel and other raw material prices,” Mr Simon Sproule, Vice-President, Global Communications, Nissan Motor Company, told Business Line.
Tatas plan to launch the low-cost Nano by end of this year.
“We face competition in every segment all around the world. A good product can take on competition,” said Mr Sproule said when asked how ‘Lite’ will face the competition from Nano. “We will compete with Tata Nano and other potential newcomers,” he said.
MoU in June
The MoU for the joint venture will be signed by June. The ULC will be made for both domestic and export markets, said Mr S. Ravikumar, Vice-President, Business Development, Bajaj Auto. The car might look completely different from the concept ‘Lite’ that was unveiled at the Auto Expo, he said.
Code named ‘ULC’ (ultra low cost), the small car will be made at a new plant at Chakan in Maharashtra, with an initial annual capacity of four lakh units.
Bajaj Auto will hold 50 per cent stake in the joint venture while both Renault and Nissan will hold 25 per cent each, a press release issued jointly by the partners said. The partners were unwilling to divulge investment details. However, the initial investment is expected to be around Rs 1,000 crore.
The ‘wholesale’ price range of the car will start from $2,500 (Rs 1.05 lakh), said the release. However, Nissan’s spokesperson said the ‘retail’ price may be higher.
“We are targeting a very competitive price. From now to 2011, the price may change with the integration of new regulations such as Euro 4 emission regulations and macroeconomic evolutions such as steel and other raw material prices,” Mr Simon Sproule, Vice-President, Global Communications, Nissan Motor Company, told Business Line.
Tatas plan to launch the low-cost Nano by end of this year.
“We face competition in every segment all around the world. A good product can take on competition,” said Mr Sproule said when asked how ‘Lite’ will face the competition from Nano. “We will compete with Tata Nano and other potential newcomers,” he said.
MoU in June
The MoU for the joint venture will be signed by June. The ULC will be made for both domestic and export markets, said Mr S. Ravikumar, Vice-President, Business Development, Bajaj Auto. The car might look completely different from the concept ‘Lite’ that was unveiled at the Auto Expo, he said.
Bajaj-Renault-Nissan takes up challenge of $2,500 car
The Nissan Micra: Nissan’s small car portfolio includes vehicles such as the Cube, Cubic, Micra, Moco, Otti and the Pino. The joint announcement by Bajaj, Renault and Nissan about plans to develop and produce a new ultra low-cost passenger car finally puts to rest speculation about whether Mr Carlos Ghosn, President and CEO of the Renault-Nissan alliance, was being serious about taking up the challenge or whether he was just indulging in a bit of wishful thinking.
Mr Ghosn, who has steered the French-Japanese alliance companies to new levels of success in many global markets, is only acutely aware that the growth markets of the future for the automobile industry are all in the emerging economies of today. India, he has often said, will play a vital role in not just fuelling the demand for new automobiles, but also in developing them.
The fact that Renault-Nissan is the only global car manufacturer or alliance that has dared to quite literally take up the challenge of developing and manufacturing a $2,500 passenger car says a lot about Mr Ghosn’s unconventional approach to breaking new ground in the automotive industry worldwide.
Admiring the autorickshaw
But, what are the synergies that the three partners bring to the new joint venture company that they are planning to set up? Mr Ghosn has openly admired the frugal engineering abilities of Indian companies and one of the companies that he had chosen was of course Mahindra & Mahindra. But, he was also sold on the value proposition which the ubiquitous three-wheeled ‘autorickshaw’ that Bajaj Auto manufactures represents.
He has been quoted saying that the low-cost production model of the ‘autorickshaw’ can be replicated for making a passenger car too. What Bajaj will bring to the table is its low-cost product development, local sourcing and production techniques that have enabled it to aggressively price many of its two-wheelers yet turn in a tidy profit.
Testing & innovation
Renault and Nissan will bring in their testing and engineering skills, their unique innovations that will be suitable for an ultra low-cost car of the sort that is being planned and of course, their access to global emerging markets.
While Renault and Nissan both have small cars in their portfolio, the latter — Japanese alliance partner — is the one that would have the kind of vehicles which could form the inspiration or base on which the ULC (code-name of proposed low-cost car) could be developed. Nissan’s small car portfolio includes vehicles such as the Cube, Cubic, Micra, Moco, Otti and the Pino.
The planned $2,500 car cannot really borrow anything much from these relatively pricey small cars since the eventual price tag of the car is in such sharp focus. Also three of these cars — the Moco (Suzuki), Otti (Mitsubishi) and Pino (Suzuki) — are contract manufactured by other Japanese companies for Nissan. One of the reasons is the fact that Nissan does not currently have engines in the 660cc category.
Tata marker
Tata Motors will be the first to launch a car in this sub-A segment of the passenger car market and going by the fact that the Nano will sport a 623cc engine, with fuel-efficiency and low-cost maintenance as the primary focuses, the Bajaj-Renault-Nissan alliance will also have to look at a similar-sized powertrain. This would be possible only if a new engine is developed from scratch for the purpose or if it is sourced from another partner.
In an introductory note addressed to journalists from around the world who were attending the Nissan 360 in Portugal earlier this month, Mr Ghosn wrote, “Our industry is facing a significant period of change. Future growth will come from markets and segments that did not exist a few years ago.”
This statement will ring true if the new joint venture company can deliver its version of the people’s car by early 2011 without major cost escalations.
Smart car at smart price, says Bajaj Auto
Bajaj Auto Ltd Managing Director, Mr Rajiv Bajaj, has reiterated the company’s foray into the passenger car segment with a vociferous assertion of being in the race, adding that it would come out with a “smart car at a smart price”.
“India cannot move forward when manufacturers put underpowered vehicles on the road,” he told shareholders referring to the 20HP passenger vehicle unveiled recently by Tata Motors. “We are in the race,” he said.
The flip side of putting up a plant to produce a million vehicles with an investment of Rs 150 crore (at Pantnagar) was that cash was not an entry barrier in the business. “Cars require investment of thousands of crores, are a challenge and create an entry barrier,” he pointed out, adding that this was the underlying reason for the recent restructuring of the company into five business units.
In reply to a shareholder’s query at the AGM about why manufacturing operations at Akurdi were not being shut down, Mr Rajiv acknowledged, “Indeed we would like to shut it down.” Production here had dropped from 4.5 lakh vehicles annually two years ago to around 50,000 today with 2,200 workers, while at there are 500 workers at Pantnagar. I understand an industry shutdown is not so easy. It has to be sick before it can be shut down,” he quipped.
Later, speaking to reporters, the Chairman, Mr Rahul Bajaj, played down the observations. “Our vendors have invested Rs 850 crore in the Pantnagar vendor park. Entry barrier is low, yes, when you have those vendors putting money for you. What he (Rajiv) was saying is that the ancillary industry is ready.”
He also ruled out the shutting down of the Akurdi plant with a categoric “No plant is closing”. Conceding that it was cost-effective to make vehicles in the more efficient plants at Pantnagar and Chakan, Mr Rahul Bajaj said that Akurdi could be closed down if the workers opted for the VRS that the company had offered on various occasions. “But nobody is taking it.” Referring to the production of the new motorcycle, he said that it would initially be produced at Waluj and be shifted to Pantnagar around December after stocks were built up. “The Platina from Pantnagar will gradually shift to Waluj.”
“India cannot move forward when manufacturers put underpowered vehicles on the road,” he told shareholders referring to the 20HP passenger vehicle unveiled recently by Tata Motors. “We are in the race,” he said.
The flip side of putting up a plant to produce a million vehicles with an investment of Rs 150 crore (at Pantnagar) was that cash was not an entry barrier in the business. “Cars require investment of thousands of crores, are a challenge and create an entry barrier,” he pointed out, adding that this was the underlying reason for the recent restructuring of the company into five business units.
In reply to a shareholder’s query at the AGM about why manufacturing operations at Akurdi were not being shut down, Mr Rajiv acknowledged, “Indeed we would like to shut it down.” Production here had dropped from 4.5 lakh vehicles annually two years ago to around 50,000 today with 2,200 workers, while at there are 500 workers at Pantnagar. I understand an industry shutdown is not so easy. It has to be sick before it can be shut down,” he quipped.
Later, speaking to reporters, the Chairman, Mr Rahul Bajaj, played down the observations. “Our vendors have invested Rs 850 crore in the Pantnagar vendor park. Entry barrier is low, yes, when you have those vendors putting money for you. What he (Rajiv) was saying is that the ancillary industry is ready.”
He also ruled out the shutting down of the Akurdi plant with a categoric “No plant is closing”. Conceding that it was cost-effective to make vehicles in the more efficient plants at Pantnagar and Chakan, Mr Rahul Bajaj said that Akurdi could be closed down if the workers opted for the VRS that the company had offered on various occasions. “But nobody is taking it.” Referring to the production of the new motorcycle, he said that it would initially be produced at Waluj and be shifted to Pantnagar around December after stocks were built up. “The Platina from Pantnagar will gradually shift to Waluj.”
Bajaj Auto moves ahead on 4-wheeler project
Bajaj Auto Ltd (BAL) took possession of 250 acres of land earmarked for its four-wheeler project at Chakan on Monday, taking its first definitive step in the direction of extending its existing product portfolio of two- and three-wheelers.
The company had announced its intent to make a foray into the commercial four-wheeler segment last year, and signed an MoU with the Government of Maharashtra in August 2006 to set up a Greenfield project at Chakan.
Mr S. Ravikumar, Vice-President, Business Development, said that the plant that would go on stream in the first half of 2009, and initially manufacture a cargo vehicle developed in-house. The total investment by BAL and vendors in the new facility, which will have a final installed capacity of 1,600 vehicles a day, is around Rs 2,000 crore, he said.
Cargo vehicles
With this foray, BAL will stake a claim to the slice of the cargo vehicle market that is currently dominated by Tata Motors’ sub one-ton offering, the Ace. That the company is taking this segment seriously is evident by the fact that BAL recently restructured its businesses, and created a commercial vehicle unit and appointed Mr R.C. Maheshwari CEO.
The company already has four units in Maharashtra, including a modern plant at Chakan where the Pulsar is manufactured and one at Waluj near Aurangabad where it manufactures three-wheelers, its smaller motorcycles and the newly launched 125cc XCD. Production at its Akurdi plant was discontinued from September 1, so the new plant will effectively be its third manufacturing facility in the State.
The company had announced its intent to make a foray into the commercial four-wheeler segment last year, and signed an MoU with the Government of Maharashtra in August 2006 to set up a Greenfield project at Chakan.
Mr S. Ravikumar, Vice-President, Business Development, said that the plant that would go on stream in the first half of 2009, and initially manufacture a cargo vehicle developed in-house. The total investment by BAL and vendors in the new facility, which will have a final installed capacity of 1,600 vehicles a day, is around Rs 2,000 crore, he said.
Cargo vehicles
With this foray, BAL will stake a claim to the slice of the cargo vehicle market that is currently dominated by Tata Motors’ sub one-ton offering, the Ace. That the company is taking this segment seriously is evident by the fact that BAL recently restructured its businesses, and created a commercial vehicle unit and appointed Mr R.C. Maheshwari CEO.
The company already has four units in Maharashtra, including a modern plant at Chakan where the Pulsar is manufactured and one at Waluj near Aurangabad where it manufactures three-wheelers, its smaller motorcycles and the newly launched 125cc XCD. Production at its Akurdi plant was discontinued from September 1, so the new plant will effectively be its third manufacturing facility in the State.
Bajaj unveils low-cost car on LITE platform
The car will be marginally smaller than the average small car with a twin-cylinder engine.
Transmission is expected to be a new format semi-automatic version.
Both petrol and diesel variants planned
Prototype developed by in-house R&DMr Rajiv Bajaj, Managing Director, Bajaj Auto Ltd, unveiling the concept car in the Capital on Tuesday. The car will be marginally smaller than the size of the average small car and will have a twin-cylinder engine. Both petrol and diesel variants are being planned.
The ultra compact, so-called $3,000 car segment is set to witness its most high profile unveiling in the Tata People’s car this week.
But, Bajaj, which had announced a tie-up with Renault of France for exploring the possibility of developing a similar passenger car, took the lead and unveiled its own prototype here today.
Bajaj’s prototype of its low-cost car has been developed on a new platform called LITE, the Pune-based company’s common platform for all four-wheelers, including compact light commercial vehicles. The car prototype unveiled here today was developed entirely in-house by Bajaj R&D and the vehicle is currently under various stages of testing.
Speaking at the unveiling here, Mr Rajiv Bajaj, Managing Director, Bajaj Auto (BAL), said that the company was conducting a feasibility study to determine the various parameters about the product and further discussions are also expected to be conducted with its partner Renault for finalising the details about investments, manufacturing facilities and so on.
He also mentioned that both the partners are yet to finalise details regarding whether a new joint venture company will be floated, and whether the French partner will take an equity stake in the venture.
The feasibility study that the company is conducting is expected to be completed by next month and the details regarding investment and size of operations would be clear by then. Talking about the expertise that Bajaj will seek from its partner, Mr Bajaj said that technical support for manufacturing, maintaining consistent quality in the manufacturing process are the issues that Renault can bring to the table for the venture. But, more importantly, Bajaj is hoping that Renault can de-risk the project in terms of geographical limitations by taking the vehicle to other markets.
The prototype of the low-cost car is expected to be launched by 2010. “We have a 2-4 year time frame by which a launch of the car will happen,” Mr Bajaj said. The car will be marginally smaller than the size of the average small car of today with a twin-cylinder engine. Both petrol and diesel engine variants are being planned and the transmission is expected to be a new format semi-automatic version, which will be a type of mix between a manual and an automatic.
Bajaj claims that the car will set a new benchmark in terms of fuel economy and offer twice as much as the current crop of small cars. The chassis of the new car will focus on maneuverability and make it useful for intra-city transportation. The platform and the engines and transmission will be commonalised between the new ultra-compact and the new LCVs.
But, Bajaj, which had announced a tie-up with Renault of France for exploring the possibility of developing a similar passenger car, took the lead and unveiled its own prototype here today.
Bajaj’s prototype of its low-cost car has been developed on a new platform called LITE, the Pune-based company’s common platform for all four-wheelers, including compact light commercial vehicles. The car prototype unveiled here today was developed entirely in-house by Bajaj R&D and the vehicle is currently under various stages of testing.
Speaking at the unveiling here, Mr Rajiv Bajaj, Managing Director, Bajaj Auto (BAL), said that the company was conducting a feasibility study to determine the various parameters about the product and further discussions are also expected to be conducted with its partner Renault for finalising the details about investments, manufacturing facilities and so on.
He also mentioned that both the partners are yet to finalise details regarding whether a new joint venture company will be floated, and whether the French partner will take an equity stake in the venture.
The feasibility study that the company is conducting is expected to be completed by next month and the details regarding investment and size of operations would be clear by then. Talking about the expertise that Bajaj will seek from its partner, Mr Bajaj said that technical support for manufacturing, maintaining consistent quality in the manufacturing process are the issues that Renault can bring to the table for the venture. But, more importantly, Bajaj is hoping that Renault can de-risk the project in terms of geographical limitations by taking the vehicle to other markets.
The prototype of the low-cost car is expected to be launched by 2010. “We have a 2-4 year time frame by which a launch of the car will happen,” Mr Bajaj said. The car will be marginally smaller than the size of the average small car of today with a twin-cylinder engine. Both petrol and diesel engine variants are being planned and the transmission is expected to be a new format semi-automatic version, which will be a type of mix between a manual and an automatic.
Bajaj claims that the car will set a new benchmark in terms of fuel economy and offer twice as much as the current crop of small cars. The chassis of the new car will focus on maneuverability and make it useful for intra-city transportation. The platform and the engines and transmission will be commonalised between the new ultra-compact and the new LCVs.
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