Posted by Anthony Zumpano on November 11, 2009 04:38 PM
If you live in India and are compelled to trade your motorcycle for an automobile, yet find the $2,150 price tag on the Tata Nano – considered the cheapest car in the world – as steep as a Kashmir peak, then you’ll soon be in luck. There are plans to release an even cheaper minicar, also known as a city car -- as long as the trio of auto brands involved can get along.
Nissan and Renault plan to handle the marketing and distribution for the new minicar, to be built by Indian automaker Bajaj, known mostly for scooters and motorcycles. An alliance was formed in 2008, but squabbling between the partners has caused production delays; the Wall Street Journal reports that the companies have been civil enough to each other to announce a 2012 launch date and a price tag to rival the Nano.
But don’t clear out that breadbox-sized space in your garage just yet. The agreement is still oral, and until recently Renault held a freeze on investments in India because of the economy; both Renault and Nissan had already invested $1 billion on a joint-venture car plant. And depending on which company representative you believe, the car will branded as a Nissan Renault – or a Bajaj.
Many branding alliances sound like paragons of synergy in the boardroom but become toxic relationships once executed. Often, made-in-branding-hell marriages are temporary arrangements, yet divorce can still be expensive and painful. Unless minicar partners want to lose a lot of money, they have to start churning out cars. The Nano still won’t be turning a profit until production reaches 250,000 annual units for three straight years. (Only 100,000 Nanos were manufactured during its first year.)
India lacks the American car culture; most commuters hop on motorcycles or scooters. Unless additional minicar brands can be developed, the lone Nano will probably be rendered a novelty, and residents of India will continue to see two wheels as better than four.