As the automobile industry goes into a consolidatory huddle, companies are finding unlikely bedfellows as they enter unchartered territories.
After collaborating with two-wheeler major Bajaj Auto to mount the first real challenge to the Rs 1-lakh car, Tata Nano, Japanese car-maker Nissan may well find a partner in commercial vehicles heavyweight Ashok Leyland for its latest challenge, another small car, this time to target India’s largest selling car, Maruti’s Alto.
While the diversity of the partnerships and risks associated with it merit attention, Nissan said it cannot make a car priced below $ 9,000 (Rs 4 lakh) on its own. The company on Tuesday unveiled the new Micra at the Geneva Motor Show, based on the new V platform specifically designed for cheaper compact cars.
The Micra will be built in only five locations, including Thailand, India, China and Mexico, and will be sold across 160 countries.
“The new Micra is an ambitious project for us and sets benchmarks for us on frugal engineering and low costs," said Colin Dodge, Executive Vice President, Nissan Motor Co. "This car will be in the B+ category but there is a segment between Micra and our low cost car with Bajaj, which has a huge potential around the world."
“As a global carmaker Nissan has to participate in it and with our various traditional partners including Ashok Leyland, there maybe an opportunity to do something on a price entry vehicle,” Dodge added.
Nissan currently has a formal agreement with Ashok Leyland to make light commercial vehicles in India, and a tie up with Bajaj alongside global ally Renault for a $ 2,500 ultra low cost car.
The company said no company in the world barring Suzuki and Hyundai have the capacity to make cars cheaper than $ 5,000 on their own. All other companies, including Volkswagen, Ford, General Motors, Toyota and Honda, would need partners if they intended to do something similar, Dodge said.
“Such a car will be attractive in all markets with a growing middle class. The BRIC nations aside (Brazil, Russia, India and China), there are countries like Indonesia, Chile, Columbia and Vietnam that this car will have a big market in,” he said. “I expect this segment to account for 20 per cent of total industry volume in the world in the not-too-distant future.”
The Micra, which will be Nissan's maiden small car in India, is itself one of the cheapest cars to emerge from Nissan's factories. “For a small car, Europe and US are no longer logical or cost effective production bases and India will feed all demand in Europe,” Dodge said. “Sale of the Micra will start in Thailand in March, in India by July and in Europe by November. Production of the car in India will begin in May.”
Renault Nissan will be inaugurating their maiden car factory in Chennai later this month, with an initial capacity of 200,000 units per annum expandable up to 400,000 units per annum by 2015. The cost of setting up this plant is Rs 4,500 crore.