Ghosn in India for talks on small car

To meet Rajiv Bajaj in Pune, plans LCV venture with Ashok Leyland.

Carlos Ghosn, the iconic CEO of Nissan Motors and Renault, is on a whistle-stop visit to India on Monday to finalise a joint venture and small-car blue-print with India's second-largest two-wheeler maker Bajaj Auto.

The visit is also expected to see the announcement of its partnership with Ashok Leyland to manufacture light commercial vehicles in Chennai with an annual capacity of 100,000 vehicles

Ghosn will be accompanied by a team of top executives that includes Carlos Tavares, chief operating officer of Nissan Motors, and Andy Palmer, head of Nissan's light commercial vehicle division. They will begin their day in Chennai, after which they will meet the Bajaj Auto top management in Pune.

Ghosn has publicly stated recently that he is keen to make a small car within $ 3,000 (approximately Rs 1.17 lakh at the current exchange rate), a project that his company is pursuing with Bajaj Auto. At the recently concluded Tokyo Motor Show, he said he hoped the small car would be available by 2010.

It is not clear whether the joint venture will include equity from Renault, which is Nissan's partner and shareholder, or a technology transfer. Bajaj Auto Managing Director Rajiv Bajaj said he was travelling and declined to comment.

Bajaj Auto and Renault had confirmed that they were holding talks in July this year to assess "very competitive vehicles" for the Indian market and a possible long-term partnership.

Renault's overtures to Bajaj Auto began after its other Indian partner, Mahindra and Mahindra (M&M), did not show interest in participating in the French firm's small car project. Mahindra has a 50-50- joint venture to manufacture the Logan passenger car in Nashik.

Renault, Nissan and M&M also have a three-way equity tie-up to make passenger vehicles in Chennai, for which the facility is yet to be built.

For Bajaj Auto, which has so far avoided equity tie-ups (it has a technical agreement with Kawasaki for motorcycles), the key question is whether it will agree to a project in which substantial control could lie with a foreign company.

Rajiv Bajaj had told Business Standard earlier that the company was looking for a "four-wheeler passenger vehicle" to hedge its bets against a slowdown in the two-wheeler company market.

The company is also developing a small car on its own.The prototype of the vehicle will be out by January 2008 at the annual Auto Expo. Bajaj said the company was also working on the commercial launch of a four-wheel goods carrier by 2009.

Nissan is also setting up joint ventures for powertrain manufacturing, technology development and cooperation in sales and distribution with Ashok Leyland.