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Bajaj-Renault small car plan hits a roadblock
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Bajaj Auto and Renault's plans of launching an ultra small car to take on Tata Motors' Nano may get delayed once again as a new set of differences over branding crops up between the two partners.
Both partners are already sparring over the design, positioning and some technical specifications of the new car. ET, in March, had said that Mr. Rajiv Bajaj had ordered scrapping of the work done so far on the project, and had demanded major modifications in design, positioning and other details. This development is likely to make the combine miss 2011 deadline for launching the car, ET had said. Tata Motors' Nano, launched in April this year, has already received bookings for over two lakh vehicles and the car is likely to hit the road some time later this year.
The latest set of differences over branding has the potential to further delay the launch, affecting the ambitions of both Bajaj and Renault. A successful launch is important for Bajaj to reposition itself as a complete automobile company rather than a motorcycle manufacturer. On the other hand, India is crucial to Renault's plans of driving sales and expanding global market share in the backdrop of declining growth in the western world.
A Renault spokesperson in India declined to comment on the status of the talks but a person close to both the groups said that the two are yet to settle issues over engine and over all car design. Mr. Bajaj, when asked specifically whether there was friction over issues relating to the ultra low cost car, tried to play it down. "Our partnership (with Renault) remains unchanged and our views on all matters are congruent. We continue to work together, adding that since his company is a 'non-entity in the car space' it had to develop a unique vehicle that no global car major can engineer in terms of profitability and viability," he added. However, it is clear that the partners have some major differences.
While Renault-Nissan has been in favour of a cost competitive car to take on the Tata Nano in the highly price conscious Indian market, Bajaj Auto has always stressed on fuel efficiency over price. The design of the ultra low cost car was frozen in late September 2008, and work on the power train - the engine and transmission combine also called the heart of the car - was continuing. Some time early this year, it was abruptly called off by Mr. Bajaj who wanted to redo the whole thing.
Renault COO Patrick Pelata admitted at the recent Geneva Motor Show in March that the Bajaj Auto MD was unhappy with the design and positioning of the proposed ultra-low-cost car. A Renault India official had said at that time that the project would be delayed by at least five to six months. The second major difference has occurred over the branding. Sources say that Bajaj is not keen on the Renault-Nissan name playing a dominant role and is keen on the Bajaj name retaining the upper hand.
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