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Indias Bajaj Auto: no truck deal yet with Renault

Bajaj Auto Ltd, India’s No. 2 motorcycle maker, has not reached a decision on making light trucks with Renault, and is prepared to go it alone, Managing Director Rajiv Bajaj said.

“We haven’t reached any conclusion with Renault on that,” Bajaj told reporters.

“We are open to an alliance, and if Renault does not want to partner us, it will be a Bajaj project,” he said, adding that they were not in talks with other commercial vehicle makers for an alliance.

Pune-based Bajaj Auto has 50 percent in a venture with Renault and partner Nissan Motor to make a $2,500 car from 2011, to take on Tata Motors’ similarly priced Nano, which is scheduled to go on sale later this year.

“The car deal with Renault does not preclude us from doing a deal with someone else for commercial vehicles, but from our side if we do partner someone, it will be Renault,” he said.

Bajaj Auto, a unit of Bajaj Holdings & Investment Ltd, also makes scooters and leads the Indian market for three-wheeled motorised rickshaws. It has said it planned to make light trucks in the sub-1 tonne to 3.5 tonnes.

Tata Motors, also the top bus and truck maker, has scored a big hit with Ace, its sub-1 tonne truck, and others are keen to enter the segment, which is growing fast on the back of improving roads and a ban on overloading.

The venture for the small car, which will have an initial annual capacity of 400,000 units for the local and other emerging markets, will make a vehicle that is “high-quality, low-cost, high on fuel-efficiency and low on emissions”, Bajaj said.

Codenamed ULC, it will aim at a fuel-efficiency of 30 km per litre of petrol, and carbon dioxide emissions of about 100 grams per km, he said.

That would make it less polluting than cars in the European Union, which has proposed tough legislation to force down emissions of carbon dioxide to 120 grams per km from 2012.

“So in terms of being green, fuel-efficient and priced right, it will be quite unique,” Bajaj said.

“It will be a niche product, as we do not want to be a part of the mainstream market. Being in the rat race (of small cars) only means you will lose your shirt,” he said.

Car makers including Fiat, General Motors, Ford Motor, Hyundai and Toyota Motor have also expressed an interest in making a small car that is affordable to more consumers in emerging markets such as India.

Renault Chief Executive Carlos Ghosn has praised the “frugal engineering” of Indian manufacturers including Mahindra & Mahindra, with whom Renault has a venture for the Logan sedan.

Bajaj Auto also has the ability to keep costs low while remaining profitable, Bajaj said. “We don’t have the size, the scale or the reputation to do what global car makers are doing,” he said. “But our margins are a healthy 14 percent, which is higher than many others.”