‘Low cost does not work, high value for money does’

For Marc Nassif, the India journey has been long and interesting. As the former MD and Country Chief of Renault India gets set to take on his next assignment, which will involve a special focus on Asia-Pacific, he dwells on the experience here. Nassif believes the base is in place for Renault to take the next phase of the India growth story forward. Excerpts from an interview.

After eight long years, how would you describe your journey in India so far?

Well, it is perhaps the first time I spent so much time and trying so hard to put things in place. It has been my longest assignment. I have had many lives here and was lucky to be part of an interesting journey.

It was during the global shocks of 2008 when we froze our plans on the Chennai plant construction. However, our CEO was always clear that we needed to stick to the India project and we merely put things on hold because of a tight situation.

This is when I learnt the meaning of resilience and it is my Middle East roots which helped me a lot during these challenging times. After the global crisis, what emerged for Renault in India was completely different from the original plan. During this long break of six to eight months, we completely changed our script for the country. Initially, we had different products planned and the initial assumption on distribution was to go with a partner and not solo as we eventually did.

We not only changed the lineup of cars but the business model. We also changed the way we would project the brand in India. My thought then was very clear: such an important market deserves top-notch treatment. We needed to be in full control and appreciate the complexities of doing business in this country.

Was it the market response to the Logan, in the joint venture with Mahindras, which also prompted a rethink?

The Logan was still not the main issue. For me, it was more important to convince my peers that it was not that partnerships do not work in India. They do work but only give you what they are meant for and not more. Partnerships will not help you position your brand.

I think this was not appropriate for what Renault wanted to do in India and clearly co-badging of outlets was not the way forward. In my opinion, it creates confusion in customers’ minds. For instance, you would never see Renault cars in Nissan outlets or the other way around. This is as true for Peugeot or Citroen in their individual showrooms.

This was a mistake in my view for Renault in India. It is okay to go in for this arrangement if you wish to distribute a brand but positioning or promoting a major brand in a major market is a different ballgame. Having said that, it was a very good experience and we learnt a lot.

Was the Logan, in your view, impacted as a result?

The Logan was not flying high and it was an eye-opener to understand why it did not work. One, of course, was the brand position. And when you have two pilots in the plane, the flight will be bumpy and the landing could be rough! At the same time, I was consistent from Day One that these things would not work and as luck would have it, the Logan did not take off. Even while the roles were clear among the partners and the teams clicked well, the business model was too complex by the end of the day.

So, did this long break in 2008-09 help Renault’s cause?

We had the whole of 2009 to rethink our strategy on product, brand, distribution, and so on. We went for one line, instead of the originally planned two, and pushed for greater flexibility in the global alliance with Nissan. India saw the partnership go one step ahead and was the first real base for the Renault-Nissan combine. This was not about cross-manufacturing but a hardcore alliance with supporting arms like the tech centre, R&D, engineering and what have you.

Was this when you started focusing on costs as part of the turnaround effort?

You will never see me being quoted on low costs. Low cost does not work; it is only competitiveness that works. Likewise, high value for money works. It is not about pricing or being cheap. And this explains why we started with the Fluence and Koleos as part of the brand building process.

People can say we are not selling enough of these vehicles but I am not sure if we could have launched the Renault brand without these cars. It is like a house which will collapse without supporting pillars. Likewise, Renault needed these pillars to kick off its brand and distribution exercise. We then needed volumes and we decided to use the Nissan platform for the next flush of cars. The feedback, contrary to common perception, has not been negative. It was generating footfalls in dealerships because these cars retain the Renault DNA eventually.

Was there a sense of regret during this evolution that the Logan did not work?

It could have worked but it finally did not. For me, it was more important looking to the future. When the Logan was launched in 2007, it was also the year of the excise duty change for automobiles. When we launched Fluence and Koleos, likewise, customs duty on CKDs went up from 10 to 30 per cent.

Does this aspect about India (in terms of constant changes in policy) worry you?

It is very tiring but unfortunately happens in many countries. India, I must add, has been among my most exciting experiences in my professional life. You are able to cope with more complexities, which in a way helps you mature faster.

My past stints in the US, Mexico and Brazil were memorable and super-exciting but this was for the first time that there was complete control of core operations at the front and back ends.

Is the global affordable car part of this plan?

The Duster is built on Renault’s global DNA with a tremendous value proposition. The next step will obviously be global because it involves scale.

We are completely engineering and developing a car from scratch in India with absolutely nothing out of this country.

This is a product for the world which has its roots here. Once this works for India, adapting the masala to other countries can be done from here.

We are putting some Renault DNA in India and ensuring that the bonsai grows stronger everyday before we can take it overseas. This is a product that will be born in India.

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