Mumbai: Bajaj Auto Ltd will introduce a small car in India next year, managing director Rajiv Bajaj said on Thursday.
“The prototype has been tested and will be ready for launch some time next year,” he told reporters said at the launch of its Discover 125 motorcycle.
The country’s second largest bike maker in 2008 signed an agreement with Renault SA and Nissan Motor Co. Ltd on the proposed small car. Bajaj will develop and manufacture the vehicle, and the French and Japanese firms will be responsible for branding, marketing, sales and distribution.
The car will be made at Bajaj’s Aurangabad factory where it manufactures three-wheelers. Rajiv Bajaj said this will help the company in achieving cost synergy as the new vehicle platform is based on a three-wheeler.
India’s 1.7 million-strong car market is dominated by the small car—generally defined as cars with an engine capacity of less than 1,200cc and shorter than 4m in length—that accounts for 70% of total sales, according to industry lobby group Society of Indian Automobile Manufacturers.
Equally significant is a spurt in worldwide demand for small cars after the spike in fuel prices that has resulted in many manufacturers looking at India as a production base.
An analyst expressed his reservations about Bajaj’s proposed car.
“Bajaj’s idea of a four-wheeler seems to be very different from that of Renault and Nissan,” said Vineet Hetamasaria, an analyst at brokerage Pincmoney, an arm of Pioneer Investcorp. Ltd. It is difficult to see how these will be reconciled, he said.
To increase its market share in two-wheelers from the current 27%, Bajaj will be introducing a new range of Discover and Pulsar motorcycles in the second half of fiscal 2012, Rajiv Bajaj said.
The Pune-based firm sold 3.82 million motorcycles and three-wheelers in the quarter ended 31 March compared with 2.7 million a year ago, and targets 20% growth in the year starting 1 April.
“I doubt they will gain further market share,” said Hetamasaria. The firm will maintain its current market share in the fiscal, he added.
Bajaj posted a 21.7% rise in February sales to 326,874 units.
The firm’s scrip rose 2.9% to Rs1,459.80 on the Bombay Stock Exchange on a day the bellwether Sensex gauge rose 0.8% to 19,445.22 points.