Rahul Bajaj, chairman of Bajaj Auto, is not in favour of the group’s low-cost

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car venture with Renault-Nissan. People close to the Bajaj family told Financial Chronicle that he has already expressed his dissent on the low-margin project.

He believes that there are too many loose ends to be tied up before the car project can take off.

Rahul initially refused to talk to FC about the car project, and directed us to speak to his elder son and managing director of Bajaj Auto, Rajiv Bajaj. The septuagenarian who built the Bajaj empire and at present chairs many committees set up by the government, later spoke to us at length on various issues, intermittently requesting us not to be quoted on anything.

He, however, refused to talk about his opposition to the car project.

Asked if the car segment was a focus market for Bajaj Auto, he said it was “a good question, the answer for which is very complicated.”

It was a crowded market that made it tough for every player, he said. “There are 13 car manufacturers in the Indian market, making 30 to 40 models. The car (from the Bajaj Auto- Renault-Nissan combine) will face tough competition from the likes of Tata Nano.”

“It is true that there may be some components common between two-wheelers, auto-rickshaws and the proposed low-cost car, and that could bring down the cost substantially. But it is difficult to peg it (referring to the proportion of components that would be sourced by Bajaj at lower prices) at 70 per cent or 80 per cent,” said the senior Bajaj.

A member of the Bajaj Auto board confirmed to FC that there were many issues that needed to be immediately addressed. “The partners are yet to finalise the joint venture structure and capital expenditure, as well as a brand name for the car. No joint venture agreement is signed. There may be a joint venture, but we don’t know what structure it would take,” the board member said.

Neither Rahul nor Rajiv has been in favour of putting the Bajaj badge on the car. “Bajaj is a popular brand for two-wheelers. It will remain a two-wheeler brand,” said the board member.

Rajiv refused to speak to FC on the subject.

The senior Bajaj said he held Renault-Nissan chief Carlos Ghosn in high esteem. “Among chief executives of all auto majors in the world, he is the most competent. He is turning around Nissan, and that is indeed remarkable.”

The Bajaj Auto board member quoted earlier said Ghosn and Rajiv, who met in New Delhi last week, agreed on certain things on the car project. “Branding, marketing and sales in the domestic and international markets will be handled by Renault-Nissan, but in consultation with and support of Bajaj.”

The low-cost car, to be launched by the three companies, will sport a new brand name, which will be jointly owned by the three.

The board member said branding was one issue that was yet to be formally decided. “All that we have decided now is that the car would not carry the Bajaj brand, nor the Renault-Nissan brand. It will be a new brand name, and it will be jointly owned by the three partners,” he said.

This position is slightly different from what the senior Bajaj had taken minutes after Ghosn’s assertion last week that the car would not have the Bajaj badge, and that Nissan- Renault would choose the brand.

Responding to media questions to Ghosn’s statement at the time, Bajaj had said, “That’s for him to say. He (Ghosn) does not run my company. He does not hold equity in my company. He doesn’t even have 1 per cent equity in my company. We shall do what we want.”

He, however, had quickly added that the car project was being handled by his Rajiv, who would be in a better position to answer questions.

The launch of the car has already been pushed by a year to 2012, due to delays in sorting out the brand issue.