Pune-based Bajaj Auto and the Renault-Nissan alliance today signed a memorandum of understanding (MoU) to produce the ultra-low-cost car (ULC), which is likely to hit the market by 2012 in India and overseas.
The MoU follows the decision taken by the three companies of not forming a joint venture company for the project as was planned in 2008. Bajaj Auto had entered into a tripartite agreement with Renault and Nissan to make the small car with a price tag of $3,000.
“The signing of the MoU follows discussions between both partners to define the product, manufacturing plan and distribution agreements,” said the release from Renault-Nissan.
As specified earlier, motorcycle maker Bajaj Auto will be responsible for the design, engineering, manufacturing and managing the supply-base for the product, while the Franco-Japanese alliance will handle the marketing and distribution.
The agreement follows the earlier MoU signed between the parties in 2008 that allowed them to start work on the proposed low-cost car. This agreement however lacked clarity on defining the roles of each entity.
The earlier agreement was to be followed by a joint venture wherein Bajaj Auto would have held 50 per cent, while Renault and Nissan would have held 25 per cent each.
Earlier in the week, Rajiv Bajaj, managing director, Bajaj Auto had said that there was no need for a manufacturing or marketing joint venture as the responsibilities of each player will be pre-defined. Bajaj Auto will only be involved in making the car as it is not interested in participating in branding or distributing.
Bajaj Auto plans to spend about Rs 500 crore ($107 million) on developing the car and setting up a factory in Pune. Renault and Nissan said today that the development of the car is progressing well and it will go on sale as scheduled in 2012.
The scheduled launch of the small car was pushed forward twice since it was conceptualised following delays over issues like branding and distribution.
Individual project plans of both Renault and Nissan involving the launch of compact cars, SUV’s, multipurpose vehicles and sedans is progressing positively in India. Nissan is gearing up for the launch of its compact car Micra on July 14, while Renault will launch its first vehicle by the middle of next year.
