Renault and Nissan to develop a Tata Nano rival car

Jan. 23, 2008. (Bloomberg):  Renault SA and Japanese affiliate Nissan Motor Co. will proceed with building an ultra low-cost car to rival the Nano unveiled by India's Tata Motors Ltd., Chief Executive Officer Carlos Ghosn said.

``We'll go ahead with it,'' said Ghosn, who heads the second-largest French carmaker and Tokyo-based Nissan, in an interview with Bloomberg Television at the World Economic Forum in Davos, Switzerland.

Renault and Nissan are looking for sales growth in emerging markets to make up for stagnating demand in their home countries and the dollar's declines against the yen, which undermines the value of Nissan's North American earnings. The Nano, which Tata plans to price at about $2,500, may upstage Renault's no-frills Logan, which costs buyers about four times as much.

``You're going to see Renault and Nissan coming with a different car in the same price range for the Indian market,'' said Ghosn, adding that the model will go on sale ``within a year and a half'' of the Nano's scheduled introduction in late 2008.

The 30-horsepower Nano, presented Jan. 10 at the Delhi motor show, will cut the entry price for aspiring car owners by more than half in India, one of the world's fastest-growing car markets. The Logan's price in Europe is 8,000 euros ($11,600).

Renault, Nissan and Bajaj Auto Ltd., India's second-largest motorcycle maker, have been conducting a feasibility study since late last year on possible joint production of a $3,000 car. Ghosn didn't give details on any factory site or partners.

U.S. Forecast

Mahindra & Mahindra Ltd., which builds the Logan with Renault, is studying ways to expand that partnership, Pawan Goenka, president of Mahindra's auto business, said at an industry conference today in Detroit, without elaborating, according to a report by the Wall Street Journal.

Nissan, Japan's third-biggest carmaker, foresees ``moderate'' U.S. sales growth this year, even as the world's biggest economy suffers a slowdown, Ghosn also said. The company's U.S. sales in 2007 rose 4.8 percent to 1.07 million cars and light trucks, while its market share was 6.6 percent, placing it fifth in the U.S. and third among Japanese brands.

``We wanted to have more significant growth, but we have to adjust to take account of the fact that the economy is weakening,'' while a recession is less likely, Ghosn said. He reiterated a forecast that the U.S. market will shrink to 15.5 million vehicles this year from 16.1 million in 2007.

Currency

The Japanese company is 44 percent owned by Boulogne- Billancourt, France-based Renault, which doesn't sell vehicles in the U.S. Nissan accounted for almost two-thirds of the French carmaker's 2006 earnings.

The yen's increase against the dollar has hurt Nissan less than Japanese competitors because the company has more U.S.- based manufacturing, Ghosn said. The dollar fell 6.3 percent against the yen last year. That reduced the value of U.S. revenue converted into the Japanese currency.

``We're less affected than some of our competitors because we have the highest percentage of North American-built cars'' for the market, Ghosn said. ``The percentage of cars exported from Japan to the U.S. for Nissan is relatively limited.''
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