Does Bajaj’s latest comment mean ULC is scrapped?

In a radical turnaround of sorts, Rajiv Bajaj’s latest comment on the Ultra Low Cost car project with Renault-Nissan have come as an anti-climax to this ambitious project even before its start. Commenting after Bajaj’s decision to stop production of its iconic scooters, Rajiv Bajaj told that the company would focus on motorcycles.

Bajaj no longer thinks that the ultra low cost car is a good idea. While Bajaj would have got recognition in the global arena had its partnership with Renault-Nissan  taken off, they met with repeated niggles over branding, engineering and various other issues. The car was planned with a price tag of around Rs 1.5lakh with Bajaj providing help with component sourcing while Renault-Nissan concentrated on design and engineering.

Bajaj’s main problems lay in its disastrous performance in the local 2-wheeler market. At one point, it came within just 20,000 units of market leader Hero-Honda but what happened after that is what Bajaj would like to forget. Its market share fell and Bajaj slipped to 4th place in the two-wheeler sales when Honda and TVS were growing. This is what became Bajaj’s biggest scare and the company has put the low cost car project in the backburner, quit the scooter segment and announced that it will focus entirely on motorcycles.

This comment will come as a big blow to Renault-Nissan which were hoping to penetrate the highly competitive hatchback segment. Neverthless, Nissan’s Micra is on track. Read it here.

“There appears to be no point in launching a new car when there are already so many models in the market – from Mercedes to Nano. We did want to launch a low-cost car but now we have changed our mind,” said Bajaj. With his tongue firmly-in-cheek , he added, “Let the company focus on bikes and then think of cars. First, the company can upgrade the three-wheelers . Maybe, we can add a fourth wheel to it and make something like a carry van, but it will certainly not be a car.”

Rajiv Bajaj, who is Rahul Bajaj’s son also told that, “the company thinks that ULC, being a standalone project , will be vulnerable to business cycles” . The senior Bajaj who was referring to a recent TV interview with his son, said he felt bad over the decision to stop production of scooters. “My son says there is no place for emotion in business. Though we have a very good understanding between us, there can certainly be genuine differences,” he signed off. So the exit leaves the iconic Hamara Bajaj as a part of India’s history.