Renault, Bajaj Join Forces for Ultra Low Cost Car

Renault and Indian company Bajaj Auto signed an agreement for the development of a low-budget model that would be released in the domestic market in 2012. Internally known as ULC, ultra low cost car, the project will compete with Tata Nano, various media reports are hinting.

According to a report by Reuters citing CEO Carlos Ghosn, Bajaj will be responsible for the design, manufacturing and sourcing for the new project while Renault and Nissan will handle marketing in both India and overseas.

If we are to trust the rumors, the new project will be priced at around $2,500 and will be especially aimed at the Indian market but will be later sold in other emerging markets.

Production will be handled by a new facility in Chakan, with an initial goal set at 400,000 units a year. The ULC will join the range below the Logan, currently manufactured by Mahindra & Mahindra.

Curiously, Renault denied a possible joint venture with Bajaj in October, saying that the company is not interested at this point in building a new low-cost project.

"Renault denies the rumour that there is any move to ask anyone, Bajaj Auto or otherwise, to take over the M&M stake in MRPL. Renault remains committed to the Indian market, as well as to the Mahindra Renault JV and is committed to getting back on track," a Renault India spokesman was quoted as saying by just-auto.com.

"I totally deny the way it has been reported. We are working at the moment on the way forward," Nalin Mehta, the JV's CEO told Reuters. "There are no plans to end the venture ... at least nothing that I am aware of."