Motorbike and three-wheel vehicle specialist Bajaj Auto has abandoned plans to develop an ultra-low-cost car with France's Renault and its Japanese partner Nissan, an executive said.
After years of talks, the companies announced in 2009 that they hoped to bring the $2,500 car to market in 2012, but there have been suggestions for months that the project was stalling amid differences among the partners.
Bajaj was to have designed and made the car, while Renault and Nissan would have provided the marketing and sales support.
The idea was to produce a product capable of challenging the Indian-made Tata Nano, the world's cheapest car.
"We don't intend to get into the low-margin (passenger car) business," Rajiv Bajaj, managing director of Bajaj Auto, announced at a news conference on late Thursday, according to Dow Jones Newswires.
"From 2007 until 2009, we had an initial plan with Renault and Nissan to develop a low-cost small car which would be like the Nano," Bajaj said, adding that the head of Nissan and Renault, Carlos Ghosn, had been informed.
Bajaj told him it was "unviable" and Ghosn agreed.
In June, Renault India managing director Marc Nassif said that the French group and Nissan would only move ahead with the project if the quality of the product "matches our DNA."
If not, the group would "do something different," he added, underlining that Renault had made no investments in the project.
On Friday, a Renault spokesman said the company had no immediate comment on Bajaj's announcement.
Instead of the low-cost car, Bajaj said it would instead unveil a low-cost commercial vehicle at the New Delhi auto show in January.
"We will stay in the commercial space... it could be a passenger or a goods carrier," Bajaj said.