Bajaj along with Renault-Nissan to Produce $2,500 Car in India by 2011

Now, it seems that Tata Motor’s Tata Nano car, dubbed as world’s cheapest car, is going to have a strong competitor in the Indian car market. Today, India’s Bajaj Auto Limited (BOM:500490), a flagship of Bajaj Group, as well as Renault-Nissan declared to form a joint venture in order to launch an entry level car with a price tag of 100,000 Rupees (2,500-dollar and 1,600-euro).

Carlos Ghosn, president of Renault-Nissan, announced the joint venture with India’s Bajaj Auto last November. The newly form joint ventures is planning to launch its $2,500 car by early 2011. The car is so far known as by its codename ULC. Initially, ULC is targeted to Indian car market, but the joint venture company could export in the other car markets later.

This is the second effort to make a small car worth Rs. 100,000 for the Indian market. Earlier, Tata Motor came up with the country’s first $2,500 car ‘Tata Nano’, which is considered to be the cheapest car in the world. Tata Nano is expected to be launched in Indian market later this year.

ULC car will be manufactured in a plant to be built in Chakan, Maharashtra. 400,000 units of ULC car will be produced from the plant. Bajaj is well-known for its motorbikes and in fact, it is the second largest motorbike manufacturing company in India. Tata Nano is likely to affect the two wheeler market of India in what it would also affect Bajaj. However, the ULC car seems to be a counter attack from Bajaj for Tata’s Nano. So, Tata Motor will definitely try its best to grab as much market share as it could until Bajaj and Renault-Nissan launch its $2,500 small car in India.

The joint venture of Bajaj and Renault-Nissan is aimed to provide fuel efficiency with its Rs. 100,000 car. The company is planning to provide 34 kilometers (21 miles)/ liter of fuel. So, in terms of fuel efficiency, ULC car might have an edge over its competitors in the market.

Bajaj will have 50 percent share of the announced joint venture company, while French auto maker Renault and Japanese auto maker Nissan will have 25 percent share each. A large part of Indian car market belongs to small car segment and the segment is growing rapidly as number of middle class people has been increased over the last few years in India. In fact, more than two third of domestic car sales belong to small car segment. That is why, domestic and foreign car makers are keen to come into small car segment of Indian car market. Now, let us see if ULC brings out success in India’s ever increasing car market.

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Nissan will stop Micra production

Nissan Motor Company Limited (TYO:7201) has decided to stop the production of one of its largely produced small car, Micra, at the Sunderland plant in UK. The company is going to build a new model which it is expected to announce next month. Forbes.com reports:

Nissan is expected to announce next month that a replacement for the Micra, to be launched in 2010, will be made elsewhere, although increased production of its Qashqai mid-sized model will take up the slack at the factory in northeast England, the newspaper reported.

Qashqai is a family hatchback. Carlos Ghosn assured that the Sunderland plant will operate in its full facility because running below the plant capacity is not profitable for the company.

On Tuesday, Nissan is going to announce its five year plan. At face of rising oil price, the car company is aiming to mass produce electric vehicles in future.

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Nissan : Going electric

On the coming Tuesday, Nissan Motor Company Limited (TYO:7201) is going to present its five year plan. The company that almost went out of business is now back again. Thanks to its major share holder Renault SA, the French car maker who came to its rescue. Under the leadership of Carlos Ghosn, the company has become profitable again. Now, with the rising oil price and growing environmental pressure, the auto maker is planning to produce electronic vehicle. The way oil price is rising, electric vehicle is going to be the next big thing. Times Online reports:

Nissan is sharing its electric- car expertise with its partner Renault and using the French brand. Ghosn has made an exclusive deal to supply cars to Israel as part of a state- backed venture that includes creating a network of roadside stations where cars can recharge their batteries.

Israel’s plan to be the first nation to encourage large- scale use of electric cars was developed after Ghosn met President Shimon Peres at last year’s Davos economic summit and heard of the infrastructure proposals of Shai Agassi, a Silicon Valley entrepreneur, who runs an initiative called Project Better Place.

Having no oil and being a small country where typical car journeys are short, Israel is regarded as an ideal testing ground for electric cars. The infrastructure will be in place by 2011 and, to encourage consumers to use electric cars, the government has set the purchase tax on them at 10%, rather than the regular 72%.

Ghosn has targeted Israel as the testing ground of Nissan’s electric car. The country is very small and does not have any oil. It is the best place for electric cars. From 2011, Israeli government is going to introduce tax breaks on zero emission cars. Ghosn expects to bring out electric car for mass market by 2011.

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Renault to Invest and Expand More in Russia

Russia is becoming a very attractive market for the auto industry. It can offer cheap but highly skilled labor for the auto makers while its auto market is flourishing too. Renault is now keen to take advantage of the Russian market. That is why it is going to increase its investment in Russia.

Forbes reported:

French car maker Renault SA will invest $150 million to double its production capacity in Russia and generate 1,000 new jobs, the company said Friday, citing soaring demand for its budget Logan brand.

Under an agreement signed Friday with the Moscow government, Renault (other-otc: RNSDF.PK - news - people ) will increase capacity at its Avtoframos factory in Moscow to 160,000 vehicles per year by mid-2009, the company said in a statement.

For its part, City Hall will provide additional land for the expansion, which will boost the factory work force to 3,300 from 2,300.

Russia is strategically located between Asia and Europe. So, if Renault can produce cars here it is can address both the markets.