Bajaj Auto shows small car

Action-packed day for car manufacturers

Unveils prototype with promise of double mileage.

Bajaj Auto today unveiled the prototype of its small car with the promise that it will be twice as economical to run as the most fuel-efficient small car in the market.

Unlike Tata Motors, whose forthcoming low-cost car has come to be known by its anticipated price tag of Rs 1 lakh, Bajaj, the country's second-largest two-wheeler maker says its car will not sell on the basis of the price.

Small car sales, which make up more than two-thirds of India's domestic market, are expected to nearly double to 2 million units a year by 2010, helped by rising middle-class incomes.

Unveiling the prototype two days before Tata Motors is slated to show its car, Bajaj Auto Managing Director Rajiv Bajaj said: "This is not a Rs 1 lakh car. It will be priced competitively but not sell on the pricing. Offering the customer twice the fuel economy is more effective than offering half the price."

He indicated that the car, which will take two to four years to make and come in both diesel as well as petrol versions, will be fitted with a "unique" two-cylinder engine. Its gear system, too, will be unusual.

"It will have a unique transmission system that will strike a balance between geared transmission, which is very efficient but not very convenient, and automatic transmission, which is convenient but not very efficient," said Bajaj, adding that the car will be best suited to "intra-city" travel.

The company is in talks with French car maker Renault and Nissan, in which Renault is the single-largest shareholder, to develop the car for mass production.

"In the very, very-very-very-very unlikely event (that talks with Renault and Nissan fail) we have every intent to move forward on our own," Bajaj said, adding he was confident the talks would be successful.

The car project will be undertaken by a new company in which all three will hold equity. The new company will also spearhead Bajaj Auto's foray into light commercial vehicles, which it unveiled today.

The car will be manufactured at Chakan, near Pune. The plant, which is being built with an initial capacity of 250,000 units, will also produce the light trucks, which Bajaj expects to launch in 2009.

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