Quadricycle Caps Bajaj’s Development Dispute With Renault-Nissan

MUMBAI – Recent government approval granted India’s dominant 2-wheel-vehicle producer, Bajaj Auto, to sell its pioneering RE60 4-wheeler as a road car may mark the final chapter in the long-running saga surrounding the company’s tie-up with the Renault-Nissan Alliance.

Bajaj is the first of the local rickshaw makers to upgrade from a 3-wheel to 4-wheel design with its new quadricycle, and operational rules for the vehicle now are being drafted under the Central Motor Vehicles Act.

Government approval to market the model as a city car did not come easily, however, with nearly 18 months of back and forth negotiations.

Bajaj had a tough task convincing officials the 4-door vehicle is safe for passengers, and it had to overcome opposition from the other 2- and 3-wheeler makers, TVS Motor and Piaggio Vehicles, who fought hard against the measure after discovering Bajaj had beaten them into the 4-wheel sector.

The vehicle also has been a long-time source of friction between Bajaj and Renault-Nissan Automotive India.

Five years ago, Renault-Nissan agreed to join Bajaj in development of an ultra-low-cost (ULC) car for Indian and overseas markets after Bajaj unveiled a concept for such a model at the New Delhi auto show in January 2008.

The two partners spent nine months exploring the project and signed a deal later in 2008 after becoming convinced the ULC project was feasible.

“We know the engine and transmission, size and weight of materials in the car: but only an Indian manufacturer like Bajaj Auto can build it,” Renault and Nissan CEO Carlos Ghosn, said at the time.

It was agreed Bajaj would develop the platform and design the ULC and Renault-Nissan would control the branding, marketing and sales in India and other markets. Ghosn was full of enthusiasm, declaring, “Bajaj (is) brilliant for manufacturing technology and (has) a good record on keeping the costs down through detailed engineering.”

By 2011, initial plans were in place for a 400,000-unit plant, with investment to be shared 50% by Bajaj and 25% each by Renault and Nissan. Still to be determined was whether the ULC would be sold under three different brands or carry a single brand that would be marketed by all three auto makers.

But differences soon developed between the partners on the ULC’s design and pricing. Bajaj projected the cost of the car at no less than $3,000, but Renault-Nissan insisted on matching the Tata Nano’s $2,500 benchmark.

Bajaj dug in its heels, ultimately declaring the planned ULC would be unavailable at any price. It instead pitched another 4-wheel vehicle, codenamed RE60 based on a modified version of the ULC platform that originated with RNA.

Powered by a tiny 0.2L rear-mounted gasoline engine (a third the size of the Nano’s) and capable of a top speed of 42 mph (70 km/h) and 82 mpg (2.9 L/100 km) fuel economy, the model technically was not a road car, and Renault-Nissan dismissed any thoughts of collaborating on the RE60, insisting on seeing a prototype of the original ULC instead.

But Bajaj kept pushing the RE60 and never delivered the originally planned ULC. Last September, an exasperated Toru Hasegawa, Nissan vice president-Africa, Middle East and India, finally pronounced the project dead.

“There is no concrete program with BAL now,” he said. “You can say the small-car project with Bajaj has been shelved.”

However, the agreement remained on paper, suspended but never officially canceled. The two parties pointed fingers at each other and, while Renault continued to wait for a ULC prototype, Bajaj kept working on its RE60 quadricycle.

“We have been in touch with (Renault-Nissan) for the last four to five years and provided whatever information they wanted (on RE60),” Bajaj CEO and Managing Director Rajiv Bajaj says. “At no point did they say ‛no’ to the project. And we have never looked beyond (Renault-Nissan).”

The RE60 4-door vehicle is a step up from the auto rickshaw, but much less expensive than a car. Bajaj plans to launch local sales by the end of the year and may export the model to Africa, Latin America and nearby countries, including Sri Lanka.

Renault-Nissan continues to insist Bajaj misappropriated its engineering, while Bajaj officials claim the technology belongs to their company.

“The partnership was not about their technology,” one official is quoted as saying. “We only needed their help for marketing ULC in (the European Union), U.S. and other developed countries.”

Meanwhile, Nissan is moving on in India with its Datsun-brand revival that will see new low-cost models in the Rs200,000-Rs400,000 ($3,300-$6,600) range roll out in 2014, then migrate to other emerging markets. Renault is developing a new small car below its Pulse model that will be positioned in a similar price bracket.

The final word on the Renault-Nissan partnership still may have to be written, with no one at the moment sure of whether a legal battle will ensue. But one thing is certain: Each partner feels the other has taken it for a ride.