Renault, Bajaj start talks on small car

French car maker Renault today said it was in talks with Bajaj Auto, the two-wheeler maker, for producing a car worth around Rs 1.20 lakh.

The tie-up is expected to increase competition in the small car market in India, with the Tatas likely to roll out the Rs 1 lakh car in less than a year.

A spokesperson of Renault today told Reuters in Paris that the company "has had contacts with Bajaj about the $3,000 car, but we are still in a phase of making up our minds". When contacted, Rahul Bajaj, the chairman of Bajaj Auto, declined to comment.

Tata Motors, the automobile company of the Tata Group, has announced that its small car would hit the market in the first half of 2008.

The small car will be "a never-before-undertaken project which will hopefully create a new paradigm in the aspirational fulfilment of the lower-income segment of India, Asia and Africa," the company's chairman Ratan Tata told the shareholders in the last annual report.

On the other hand, no specific details of Renault's proposed venture with the Bajajs are available. According to industry experts, the project may come up in Chennai.

The tie-up with Bajaj could help Renault generate greater exposure to marketing channels owing to Bajaj's larger presence and reach in the market, experts said.

Currently, Renault has a tripartite agreement with Mahindra and Mahindra and its partner Nissan for a series of cars.