As the world's cheapest car Tata Nano gets dearer, so it seems does its prime competitor, the Bajaj Renault ultra low-cost (ULC) car.
Bajaj Auto Ltd on Sunday said a car at the cost of less than the Maruti 800 (R1.9 lakh) may not work and the company would not like to sell a car at an operating margin of less than 20%. The Bajaj Renault ULC car, which has been under development since 2008 and is slated to be launched in 2012, is widely expected to be Nano's first direct competitor with a price tag close to $2,500 (R1.1 lakh).
"A car at a cost of less than Maruti 800 is not going to work... My son Rajiv may not like to sell a car with EBIDTA less than 20%," said Rahul Bajaj, chairman, Bajaj Auto Ltd on the sidelines of the India Economic Summit. "This year, we are going to sell four million two and three wheelers together. So why should we focus only to sell 20,000 units of a car. It doesn't make sense. Unless we can sell about 200,000 units per year, it will not be feasible."
Currently, the Maruti 800 is priced between Rs1.9 lakh and Rs2.3 lakh (ex-showroom Delhi), while the Nano, after two price revisions, costs almost Rs1.4 lakh.
Bajaj has been evasive about the possible price of the car highlighting instead, its high fuel efficiency, which it claims would be almost 30 kmpl. Its global partner Renault-Nissan though, has always said it would be an ultra low-cost car that will compete with the cheapest in the market.
When contacted, Bajaj managing director Rajiv Bajaj refused to be drawn into the debate on the price of the car.