Marketing Automotive

Less than a year after the launch of the Tata Nano, competition is announcing new initiatives. Renault- Nissan partnership announces that it will be attempting to launch its own $2,500 Indian minicar.

Carlos Ghosn, Renault/Nissan President and CEO, said that the two companies are developing “an ultra low cost vehicle” to be built by the Bajaj Group, benefiting from its “expertise in light vehicles and knowledge of the Indian market.” The new car, which will be launched on Indian roads in 2012, will cost 110,000 rupees, against 123,000 rupees for the basic model of the Tata Nano. The design, development and production will be performed by Bajaj with the support of Renault-Nissan, while marketing, and distribution will be led by Renault, with the support of Bajaj (1). The name of the new model has not yet been announced.

Last month, Renault has withdrawn from the joint venture created with the Indian group Mahindra to manufacture the Logan in India, while reaffirming its strong interest in the country, one of the most promising markets in the world.

Tata with its Nano already is teaching the auto business a thing or two about the future of their industry. One lesson of the impossibly low price is the importance of appealing to growing new markets, not just fighting for scraps of existing ones. Another is adapting technology to a more crowded world: Tata engineers placed a decidedly smaller engine in the Nano because more horsepower simply would be wasted by Indian drivers, who typically cope with average speeds of 10 mph to 20 mph in their car-clogged cities. Tata has opened up a new automotive frontier for the world. As for how the Indian conglomerate will respond to the minicar competition from Renault/Nissan, let’s just say they won’t want to see Nano second.

India and its billion people dream about the giants of the automobile, weakened by the crisis and enticed by prospects of growth that they no longer dare to imagine in Europe. Despite the boom of recent years, the Indian market is still nascent with 7-8 cars per 1,000 inhabitants.

(1) Bajaj Auto is a major Indian automobile manufacturer started by a Rajasthani merchant. It is world’s fourth largest manufacturer of two-wheelers and India’s second largest two wheeler and the world’s 4th largest two- and three-wheeler maker. It is based in Pune, Maharashtra.