Tata Motors gives Bajaj's small car a rough ride into Indian market

India Dispatch: Bajaj Auto, one of India's biggest manufacturers of scooters and three-wheelers, is hoping to start production of a low-cost four-seater quadricycle in a few months.

Managing Director of India's Bajaj Auto Rajiv Bajaj poses with newly launched vehicle - RE60 at a function in New Delhi on January 3, 2012.  Indian manufacturer Bajaj Auto has unveiled an ultra-low-cost car as its first foray into the four-wheel market, pitching the vehicle as a solution to urban pollution and congestion.Stressing the car's high fuel efficiency and low carbon dioxide emissions, but it did not release a price tag. AFP PHOTO/ SAJJAD HUSSAIN
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Autorickshaws, the small three-wheeler vehicles that can be found buzzing their way through villages, towns and cities across the subcontinent, are a hallmark of Indian life.

But that could be set to change if one manufacturer's plans to launch a quadricycle in the country are a success.

Bajaj Auto, one of India's biggest manufacturers of scooters and three-wheelers, is hoping to start production of a low-cost four-seater quadricycle in a few months.

The 216cc vehicle, called the RE60, weighs just under 400 kilograms, has a top speed of 70kph and looks like a cross between a toy car and a souped-up golf buggy. No price has yet been revealed for the vehicle, but estimates suggest that it is likely to be as low as 100,000 rupees (Dh6,692).

Getting the vehicle to market is not proving to be an easy ride, however.

Bajaj is waiting for clearances from the government, as a committee looks at creating regulations for the quadricycle, which would be classified as a new category of vehicle for India. Meanwhile, car companies including Tata Motors are vehemently challenging the launch of such a vehicle in India, questioning its safety on the country's chaotic roads.

The vehicle, which is considered to be superior to the autorickshaw, but is not classified as a car because of its low power and size, is intended primarily as an upgrade for autorickshaw drivers. But there are some concerns that the vehicle could rival car companies' cheap models.

Analysts, however, say the quadricycle could be exactly what India needs in terms of a public-transport solution.

"The Indian market needs this type of product," says Mitul Shah, an auto analyst at Karvy Stock Broking. "If this product is launched with cost-effective pricing, it could be a very big success. If you compare it to the three-wheeler, it's a better product."

Karl Slym, the managing director of Tata Motors, has been outspoken about his objections to putting quadricycles on India's roads, citing safety issues.

Mr Slym recently tweeted: "Why? The [government and] industry have been accelerating efforts in traffic safety and environment, now we consider Quadricycle. Why go backwards?"

Bajaj has defended the project by saying that the quadricycle is safer than three-wheelers.

"If all three-wheelers are replaced by four-wheelers, all such users will travel safer," Rajiv Bajaj, the managing director of Bajaj Auto, told the Economic Times. "To argue that three-wheeler (or four-wheeler) users should all buy cars instead is to effectively tell people who can't afford bread to eat cake."

In the case of Tata, its Nano model was launched as a budget car that was expected to take the Indian market by storm, but it has not managed to take off as anticipated. The Nano is the world's cheapest car, priced from 140,000 rupees in India. Initial projections were for sales of 20,000 cars each month. As of last November, just 215,000 of the cars had been sold since its debut in June 2009. The 624cc Nano can do 25km per litre, while the RE60 can cover 35km with the same amount of fuel.

India's car market has suffered in the past year amid rising fuel prices, high interest rates and a slowing economy.

Nevertheless, concerns that the RE60 will be a threat might be unfounded.

"It will be mainly targeted as public transport rather than a personal vehicle," says Mr Shah. "But in overseas markets, it will be also a personal vehicle. In Sri Lanka or Africa or Egypt, it can be a personal vehicle also."

In India, consumers looking for personal vehicles would be put off by its appearance, he says.

"There are no very strong aesthetic looks given to the product. All the features in terms of the physical appearance and the interior is not like a normal car. This is more or less like an autorickshaw, kind of lower quality interiors, design. The company has not spent much on the aesthetic part of the product.

"They want to make it cost-effective, so the public transport people can easily buy it," he adds. "The price expected will be slightly higher than the normal three-wheeler, but will be much lower than the four-wheeler passenger car. Bajaj realised that slowly the lifestyle of the Indian customers are getting upgraded, so they will move from the three-wheeler public transport to four-wheeler public transport."

Mr Shah says that given that the quadricycle is an upgrade of the autorickshaw, its safety features might not be in line with passenger cars, but were acceptable as a replacement for the current vehicles.

It is unlikely that the quadricycle would be allowed on highways in India.

Mr Bajaj last month said that the RE60 would be produced in a facility in Aurangabad, with an initial capacity of 200 vehicles a day.

He also said that there could be the option of tapping the European market through a partnership with Renault-Nissan. The main export markets Bajaj will target, however, are Asia, Africa, and Latin America.

Should Bajaj not get the clearances in India soon, Mr Bajaj said that the company would not hesitate to export its product while waiting for the regulations to be addressed in its home market.