And next the Renault Pico ??

A cheaper car than the Tata Nano

Renault has announced that it will produce a cheaper vehicle than the Tata Nano, which is currently the world’s cheapest car.

This story from Autonews (registration required) reports that the CEO of Renault and Nissan, Carlos Ghosn, states that an agreement has been signed with Bajaj Auto whereby

  • an ultra-low-cost car would be produced at a lower cost than the Tata Nano
  • Bajaj would undertake design, manufacturing and sourcing
  • Renault and Nissan would handle marketing (including in the Indian market) and provide technical support
  • no changes were indicated to a previously signed ULC cooperation agreement whereby Bajaj would own 50% of the project, Renault and Nissan would each own 25%

Apparently Ghosn indicated that there would be a difference between price and cost, suggesting perhaps that the ULC would sell at the same price as the Nano, thereby giving Renault, Bajaj and Nissan a better margin than Tata’s. “I can tell you the cost of this car would be lower than any car today made in India,” said Ghosn.

Here at Vox Sapiens, we have already written about the Nano, and how it might change the auto market in our Here comes the Nano tax article.

Additionally, General Motors plans to launch a small car for India next year, and Toyota plans one the year after.

These ULC initiatives only confirm our view that ultra-low-cost vehicles are going to cause a dislocation in the automotive industry.

Ghosn only confirmed that the ULC will definitely be sold in India, although he did state that exports will be a possibility. We don’t understand the reluctance of OEMs to consider the developed world market for these vehicles, especially in the near future where such ULC offerings may be the only affordable options for many families.

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