A joint venture between Nissan -Renault and Bajaj Auto, which plans to launch a low-cost car to compete with the Tata Nano, will have 70 to 80 per cent f its parts in common with those used in the Pune-based company's scooters, motorcycles and three-wheelers. This will result in the project cost for the new car being pared down from Rs 1,500 crore to around Rs 200-300 crore.
In May 2008, Bajaj , Nissan and Renault had announced plans to manufacture 4,00,000 ultra low cost (ULC) cars per year at a new plant, which would have cost Rs 1,500 crore. Nearly all aspects of that earlier agreement have now changed. "I don't have a number as yet but my estimate is that it would be closer to around 20% of the earlier investment figure due to common product aggregates and common facilities," Bajaj Auto MD Rajiv Bajaj told ET.
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Bajaj Auto has a 50 per cent stake in the JV while Nissan and Renault have 25% each. "There is excess capacity in the global car market. Our thinking was that if the ULC is a standalone project, it will be vulnerable to business cycles. We decided to derisk the project by leaning on our motorcycle and three-wheelers for its platform and aggregates. Around 70-80% of the internal components should be common," said Mr Bajaj.
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