Renault Plans Low-cost Rival to India's Nano

Will partner with Nissan and Bajaj Auto to deliver car in 2012

Partners Renault and Nissan said on Nov. 10 they would launch "an ultra low-cost car" in the Indian market in 2012 to take on the Nano, the world's cheapest automobile.

Carlos Ghosn, who runs French carmaker Renault and Nissan of Japan, said the vehicle would be made in a tie-up with leading Indian scooter and three-wheeler maker Bajaj Auto. "The ultra low-cost car will come to market in 2012," Ghosn said at the India World Economic Forum.

It is aimed at rivalling the world's cheapest car, the Tata Nano, which hit Indian streets earlier this year.

The venture is also aimed at improving the slim presence of the Renault Nissan Alliance in the country's explosively growing auto market in which the small car segment is expanding fastest. The new car will drive into a market crowded with competition from other manufacturers planning small automobiles, including one to be launched by General Motors in 2010. Toyota also aims to have a small car for India in 2011, while Ford has said it will start producing its own version in India next year.

Ghosn would not disclose the price of the new vehicle to be designed and manufactured by Bajaj and marketed by Renault Nissan, but he said its cost would be "amazing" and "lower than any car today made in India" when taking into account running expenses. Renault Nissan has said in the past the vehicle, which had been targeted to go on sale in 2011, would retail for around $2,500 to $3,000. The four-door hatchback Nano, produced by the conglomerate Tata Group, sells for around $2,000.

Ghosn said Renault Nissan, which is building a car plant in the southern Indian city of Chennai, was keen to improve its tiny penetration of the Indian market. The market is forecast to triple to six million cars annually in a decade from two million now. "Renault Nissan has 10% of the worldwide market. Globally we will be the third or fourth largest (in volume sales this year)," he said. But "in India, our market share is less than one percent. We can't accept the situation. We have to adapt our products" to suit the Indian market. "We need a entry price that's very competitive" that the new car will provide, he said.

Ghosn would not say how much Renault Nissan would invest in the venture with Bajaj or give any details about the structure of the tie-up. Under the initial 2008 deal, Bajaj was to have a 50% stake while Renault and Nissan were to each take 25%. "This four-wheeler will share a lot of the components from the (Bajaj) three-wheeler, lots of supplies will be common," which would reduce manufacturing costs, he added.

Ghosn said Nissan's plans to manufacture light trucks with India's Ashok Leyland were going ahead and ties were good with India's Mahindra & Mahindra with which it is making the Logan sedan, despite poor sales of the car in India. Car critics have panned the Logan for its "dated looks" and high cost.

Copyright Agence France-Presse, 2009

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