In a reversal of the trend where most carmakers today are coping with unutilised production capacities, Renault-Nissan may soon start looking at ways to significantly expand output in India.
This has been necessitated with the launch of the Renault Duster compact SUV on Wednesday. With this, the Franco-Japanese alliance’s Chennai plant is now close to filling up the installed annual capacity of 4 lakh units (on three shifts and two lines).
“With the first production line running at three shifts, we began the second line in March where the second shift has also been started now. We should soon be utilising almost the full capacity of 4 lakh a year after we add the third shift here,” Mr Marc Nassif, Renault India’s MD, told Business Line.
Exports, top priority
With exports a high priority, the other volume models made at the facility are the Renault Pulse, Nissan Micra and Sunny entry sedan. It also makes the Renault Fluence and assembles the Nissan Teana.
In January, Mr Kou Kimura, CEO and Managing Director, Renault-Nissan Automotive India, told this newspaper that the capacity at Chennai would be doubled to 8 lakh units by 2016. The alliance is targeting a 10 per cent market share in India.
The Duster is the most important model for Renault’s India strategy, since the carmaker began its innings with the Fluence, Koleos and the Pulse last year.
As an inaugural offer, the compact SUV has an aggressive starting price of Rs 7.19 lakh (petrol) and it marks the birth of almost a new segment in the domestic car market.
Indeed, over the next year, this segment will see a lot of action with several new launches. To name a few, there is the Mahindra mini-Xylo, Ford EcoSport and market leader Maruti Suzuki’s yet unnamed small SUV (shown as the XV Alpha at the Delhi Auto Expo earlier this year).
First mover advantage
The company hopes the Duster's first mover advantage will help it wean away buyers from the premium hatch (Maruti Swift, Hyundai i20), the entry sedan (Maruti Dzire, Toyota Etios, even the Volkswagen Vento) and the entry SUV segments (Mahindra Scorpio, Tata Safari).
In all, there are eight variants available. Prices for the diesel versions, which the company hopes will account for over 90 per cent of Duster’s sales, start at Rs 7.99 lakh. The diesel uses the same 1.5 litre dCi K9K engine seen in Nissan’s Micra and Sunny, but in the Duster it has two power options available - 85 PS and 110 PS.
While the diesel power plant is made at the Renault-Nissan alliance plant near Chennai, the 1.6 litre K4M 104 PS petrol engine is currently imported because the company expects petrol volumes to be small. A 4X4 version is also being considered, though an automatic variant is not planned immediately.
Renault is confident that the compact SUV will help it cross the 30,000 units sales mark in 2012, up from 1,500 units in the second half of last year.
“We did allow dealers to take some deposits. We have pre-launch reservations of up to 4,000 units,” Mr Marc Nassif, MD at Renault India, said.
Added another company official, “We expect half of the sales target for 2012 to be met from Duster volumes.”
Dealerships are also being doubled to 100 by end of the fiscal to support the growth projections.
The Duster will also be Renault’s only export model from India to right-hand drive markets, starting with the UK. “Models exported to the UK will use the Dacia brand,” Mr Nassif said. Dacia, Renault’s sub-brand, already sells the Duster in most left-hand drive markets.
Its Japanese alliance partner, Nissan, already exports far more volumes of the Micra hatch than it sells at home.