The Hindu Business Line : Renault here to stay despite challenges

Mumbai, Nov. 5 Mr Carlos Ghosn’s comments at the Tokyo Motor Show last month on reviewing the multi-partner strategy in India may have caused a flutter in industry circles but the fact that he reiterated Renault’s long-term commitment here has come as welcome news to people associated with the company.

“Some of us were worried that Renault would do a Peugeot, which exited India 12 years ago and rendered nearly 2,000 people jobless. We are now relieved that nothing of the sort will happen,” they said.

While the joint venture with Mahindra & Mahindra is the high-profile investment which is constantly in the news, Renault’s India exposure includes a design centre in Mumbai, a logistics platform in Pune, an engineering centre in Chennai, apart from its Rs 4,500-crore joint venture with Nissan at Chennai and the proposed alliance with Bajaj Auto for the ultra low-cost car. Mr Ghosn is, of course, the President and CEO of both Renault and Nissan and, as sources say, “would ideally like to see both companies have the perfect dream script in India”.

For the moment, though, it is the Japanese automaker which is on course with its India plans. Not only has Renault put its Chennai investments in cold storage but its joint venture with M&M also does not seem to be heading anywhere with Logan sales faltering at around 500 units a month.

In the process, it has not been the easiest of times for those within Renault as well as its suppliers and dealers who have had to contend with low volumes. Now that Mr Ghosn has clearly indicated that the company will bring out a second wave of products, there is a greater sense of hope and confidence.

However, sources say this is easier said than done especially when it comes to putting the Logan back on track. M&M believes that trimming its length to four metres which will qualify it for lower excise duty (and hence a lower price tag) could do the trick in boosting sales. Mr Ghosn, instead, has referred to greater localisation as the answer to cost-control. It remains to be seen which solution is more viable.

As for Chennai, Renault would be more inclined to using Nissan’s small car platform for its own products to optimise synergies between the two global allies. It will also translate into substantial savings in costs but the key is to push the agenda aggressively since the French company is not perceived to be exactly proactive on the product side.

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