Looking at various synergies in terms of products

Discussion points

Bajaj to focus on the sub 3.5-tonne segment where volumes are high

Renault is in the utility category in the range of 1-5 tonnes

Bajaj also looking at the cargo segment where Renault is not a high volume player

Priyanka Vyas

New Delhi, May 15 Renault’s series of engagements in the domestic market has led to its discussions for an alliance with Bajaj Auto for the light commercial vehicles (LCV) segment remaining at a nascent stage. Renault-Nissan along with Bajaj on Monday announced plans to launch a car that would compete with Tata’s Nano. Besides, Renault-Nissan is also setting up a facility in Tamil Nadu to produce passenger cars.

While Bajaj Auto has indicated that it was open to an alliance with Renault for the LCV business, it said the discussions were at an early stage and a many issues needed to be addressed.

“The discussions are at an early stage as the main focus has always been the car. However, we are looking at various synergies in terms of products and the volumes that we could have in those segments,” said Mr R. C. Maheswari, Commercial Vehicles Business Head at Bajaj Auto.

Renault said that the task of launching a car with Bajaj required lot of effort along with its expansion with Nissan to produce cars in Chennai. This also could be the reason for the slower pace in discussions. “We have not really discussed the intricacies for the LCV business unlike in the case of the car. A lot of effort is being put on the engineering front for the low-cost car which is entirely a deviation for our company. There are lot of activities happening around our upcoming facility in Tamil Nadu,” said a Renault spokesperson.

Mr Maheswari said that Bajaj was focusing more on the sub 3.5-tonne segment in the light commercial vehicle where the volumes are high in markets such as India and China due to the hub and the spoke model. However, Renault vehicles are more in the utility category in the range of 1-5 tonnes.

“However, our platforms are very adaptable to the kind of LCVs that we want to produce,” said a Renault spokesperson. Renault also produces trucks in Europe that are sold under its brand name, but Volvo has the license for marketing and distribution.

Bajaj is exploring opportunities for alliance in the cargo segment where Renault is not a high volume player. Bajaj, being a three-wheeler player, plans to restrict itself mainly to the sub 3.5-tonne segment and does not want to leapfrog in to the top end category which would require massive investments, Mr Maheswari.

Besides, beginning from the lower end of the LCV segment would be an extension of its existing business and also give the company time in understanding the market and leveraging its existing three-wheeler distribution network. Industry analysts point out that Bajaj is feeling the pinch with Tata’s Ace in the sub one-tonne segment and Piaggio Ape. Morever, it would be able to achieve high volumes only in the lower end of the segment.

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(This article was published in the Business Line print edition dated May 16, 2008)
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