India’s second largest two-wheeler maker, Bajaj Auto Ltd, which has plans to develop a small car with French car maker Renault SA, said its main contribution to the proposed vehicle will be the engine.
“The heart of the whole thing is the engine,” said Rajiv Bajaj, 40, managing director of Bajaj Auto. “We think we have specific ideas in that context. They hinge on a very new kind of technology that we are developing in-house. We are still not sure if the technology is viable, it will take a few months to understand that.”
This will likely be the first time when an Indian company will make the engine, typically the most technology-intensive part of an automobile, in a collaboration with a foreign car maker.
Bajaj developed the popular Pulsar motorcycle on its own and uses its “DTSi” engine on the bike now, making it more fuel efficient and giving it better acceleration.
Rajiv Bajaj, who is a mechanical engineer by training, said that the technology which the company is developing is not present in any four-wheeler in the world.
“If the technology seems feasible, which we’ll know by early next year, typically the development programme is a three-year programme,” Bajaj said. He expects to roll out the car in 2011.
Renault said in a statement last week that it was “in preliminary deliberations to jointly understand customer requirements and business potential for very competitive vehicles in India.”
Renault, which sells the Logan sedan in the country in partnership with India’s largest utility vehicle maker, Mahindra & Mahindra Ltd, has said it is interested in producing a $3,000 (Rs1.2 lakh) economy car to increase its marketshare in India and other developing economies. The company’s chief executive Carlos Ghosn has said that it can’t develop the car alone and wanted to partner with an Indian company, citing lower costs in engineering and production.
Passenger vehicle ownership in India is at seven per 1,000 people, compared with 12 per 1,000 in neighbouring Pakistan. Most new cars in India are purchased by first-time buyers. India’s largest automaker by revenues, Tata Motors Ltd, plans to introduce in 2008 a small car that will be priced at Rs1 lakh, almost half the price of the Maruti 800, currently the cheapest car in the market.
Bajaj said his company was focusing on getting the monthly cost of ownership—typically loan repayment, fuel and maintenance cost—right, rather than simply focusing on the initial price.
“If a car is costing Rs2 lakh, you can still get it financed, and if it does 60 kilometres a litre, then it changes things completely. I’m much more worried with that.”
The average monthly cost of ownership of a 100cc motorcycle isRs 2,500 a month compared with Rs10,000 for a small car (assuming same tenure of loan and same distance travelled every day).
Companies such as Tata Motors Ltd, and now Renault hope to entice the 50 million users of motorcycles, the nation’s main mode of transport, to consider switching to cars.
While Bajaj is working on the engine technology, Renault is likely to work on other aspects including exteriors and design. “We would like them to do that,” said Bajaj.
(Abhineet Kumar and Sudha Menon contributed to this story.)