Bajaj Auto may partner Renault for a small car to take on Tata

Tata’s Rs.1 lakh pet car project has generated lot of interest and excitement among local auto majors as well as global auto giants. Renault has declared its intention of developing a $3000 small car in India to generate larger volumes.

Bajaj Auto and Renault are putting up an alliance to realise this dream which could extend to commercial vehicles as well. Renault currently has a partnership in India with Mahindra & Mahindra which sells the low-cost sedan Logan.

The reason for Renault not partnering M&M in the small car venture is because M&M want to be a global player in the SUV market and it feels that this venture would not bring attractive margins.

Bajaj Auto is also taking on Tata’s successful Ace truck and the newly launched Magic and Winger by bringing out its own light commercial vehicles.

Bajaj Auto gains as it has a large distribution network and good production infrastructure. This coupled with the fact that motorcycle market is witnessing a negative growth calls for a diversification into four wheelers to increase shareholder’s wealth.

Off late, Honda Motor and Maruti have indicated that a $3000 car is infeasible though Toyota and Ford are developing an Indian specific low cost car. So Bajaj Auto needs to be an early mover if it wants to capture the market before more players joins in.