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Renault makes 'fresh start' in India

AFP · 8 Jun 2011, 09:15

Published: 08 Jun 2011 09:15 GMT+02:00

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After a false start, French carmaker Renault is making an ambitious re-entry into India's fast-growing auto market where it plans to introduce a slew of new models and rapidly scale up sales.

Marketing itself with billboards announcing "Bonjour India. We are Renault," the company last month launched a luxury sedan in the country called the Fluence and aims to sell four more models by the end of 2012.

"We really have just launched the brand (Renault). It didn't exist in India," Renault India managing director Marc Nassif told AFP. "It's a fresh start for us."

Last year, Renault abandoned its previous attempt to crack the Indian market – an unhappy tie-up with India's top sports utility vehicle maker Mahindra and Mahindra that resulted in the Logan, a dated-looking car that never took off.

The French manufacturer, battling to overcome an embarrassing bogus industrial espionage case at home, has designated India, Brazil and Russia as its top three strategic markets for international expansion.

The partially state-owned group is eyeing a 2.5 percent share of the Indian car market by 2013 and five percent in the longer term.

It marks a big goal for Renault, which is doubling capacity to 400,00 units a year at its new $1-billion manufacturing plant in the southern Indian port city of Chennai, as "we have zero sales right now," Nassif said.

The Fluence, the first Renault car to be assembled in India, is to be followed by a high-end sports utility vehicle this year, the Koleos, and three cars next year, including a lower-cost hatchback.

The carmaker is attacking the market from the top down, launching in the luxury segment even though most domestic car sales are in the small-car segment.

Nassif said Renault aims to produce a low-cost car for the Indian market, but a major question mark hangs over a proposed tie-up to produce a car to challenge India's Nano, the world's cheapest auto, made by the Tata group.

He said Renault and its Japanese partner Nissan will only move ahead with the project with Bajaj, a motorbike and rickshaw maker, if the quality of the product "matches our DNA."

If the product does not meet Renault's standards, "we will do something different, we will have our opportunities," he said, adding: "It's not a joint venture and we haven't made any investments."

Renault is driving into the Indian market, still overwhelmingly dominated by the Japanese-Indian group Maruti Suzuki, after other foreign auto makers such as General Motors and Toyota have established a presence.

Despite its latecomer status, Nassif believes there is still big potential for the group.

Car sales clocked 30 percent growth last year to hit nearly two million units, buoyed by increasing affluence in an economy growing by around eight percent per year.

While Indian car sales are expected to slow slightly this year due to higher financing costs, growth is still expected to be up to 16 percent, according to the Society of Indian Automobile Manufacturers.

Story continues below…

"When you look at that growth and you have a newcomer entering at this stage, this is still a land of huge opportunity," Nassif said.

"India's middle classes total more than 350 million people, all of whom are potential buyers, and their numbers are continuing to grow," he added.

"We can take part of the cake."   

Renault is aiming to move swiftly, opening 40 dealerships by year end, from 14 now in 14 cities, and ramping the number up to 100 in 55 cities by the end of 2012.

The group also aims to export components worth €100 million in 2012, up from 35 million euros in 2010, following the lead of other global automakers which are making India a production hub, attracted by cheaper labour costs.

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