Nissan entering joint venture to produce cheap cars for India

by Hiroko Nakata

Nissan Motor Co., Renault SA of France and Bajaj Auto Ltd. of India said Monday they will form a joint venture to develop, produce and market ultralow-cost cars, mainly targeting the rapidly growing Indian market.

The plan is apparently aimed at competing with Indian auto giant Tata Motors, which stunned the auto industry in January by unveiling its Nano minicar priced at 100,000 rupees, or around $2,500.

The new car by Nissan, Renault and Bajaj Auto is code-named ULC, with its price also to be set around $2,500.

The official name of the new car has not yet been decided, Nissan spokeswoman Yuko Matsuda said.

The announcement came a day before the release of Nissan’s new five-year business plan as well as its earnings results for the business year that ended March 31.

The joint venture, to be owned 50 percent by Bajaj Auto and 25 percent each by Renault and Nissan, will start sales in early 2011 in India. It will eventually aim at other emerging markets with growth potential, the carmakers said in a statement.

“Our primary target is to meet the demand in India,” said Matsuda, adding that the new model will not target the Japanese market.

Matsuda said the low-cost cars will be developed for families and not for commercial use. They will have gasoline engines, but diesel engines will be eyed in the future, she said.

The joint venture will produce the ULC at a new plant in Chakan in Maharashtra state. Planned production capacity will be 400,000 units a year.