Auto focus

Kwid could arrest India slide for Renault

Updated on: Jul 09, 2015
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Russia and Brazil continue to be wobbly markets for the French carmaker

A little over four years ago, Renault had outlined a mid-term strategic plan where it had positioned India as its 11th largest market by 2013. At that point in time, it was not even in the list of the company’s top 15 markets.

The forecast was spot-on with India emerging Renault’s 11th largest car market globally for the first quarter (January-March) of 2013. This was thanks largely to the astonishing performance of the Duster compact SUV which had taken the market by storm and was comfortably averaging 5,000 units each month.

Rise and fall

With sales of 19,869 units in the three-month period, India was barely 600 units behind Spain which has notched up 20,461 units. Belgium was in the ninth spot with 21,714 units while Iran (which did over 30,000 units in Q1 of 2012) was trailing India by nearly 1,000 units. On top was France, followed by Russia, Brazil and Germany while the UK, South Korea and Morocco were at the fag end of the Top 15 list.

How times have changed since then! And all this is a grim reminder of how global dynamics can see violent fluctuations with Russia in particular being a classic case in point. It has now slipped to the eighth position while India is at the end of the queue at 15. Conflicts and economic crises have taken their toll on countries which once promised the moon but are now struggling to stay afloat.

Early this week, Renault made public its first half results and reiterated that the “turmoil in certain emerging markets” was something that could not be ignored, particularly in the case of Russia and Brazil where registrations dropped “in line with the market”.

"In the first half of 2015, we strengthened our position in Europe significantly and softened the fall in the Russian and Brazilian markets. These results show that we are less dependent of specific markets and that we know how to seize the opportunities that present themselves", said Jérôme Stoll, Chief Performance Officer and Marketing Director.

There was a specific reference to India where sales were down 3.2 per cent (23,346 vehicles) in the first half but are now on the upswing thanks to the recently launched Lodgy multipurpose vehicle. Renault is now hoping that the Kwid “should improve this dynamic in the second half of the year”. This compact car, scheduled to debut in the festive season, is tipped to be a critical growth driver for the company.

The Top 15 list for the first half shows that Europe is back on track with France, Italy, Germany, Spain, Turkey and the UK firmly perched on top while Brazil continues its reign as Renault’s second largest market. Ahead of India are Belgium, Algeria, South Korea, Argentina, Morocco and the Netherlands.

New plans

The rapid fall of India is reflective of the slowdown in the market through two successive fiscals. In addition, the Duster has been facing stiff competition from the Ford EcoSport which has resulted in its monthly sales now averaging 2,000 units, a considerable fall from the highs of 2012 and ’13. With Hyundai now poised to launch the Creta in the coming weeks, the Duster is likely to face further headwinds.

Yet, Renault will have reasons to feel upbeat thanks to the positive response to the Lodgy while the Kwid could prove to be a game-changer. For one, it will be part of a volumes-driven segment where the initial momentum is assured. Two, tremendous work has gone into localisation which means there will be a competitive price tag on offer.

If things do go according to plan, the Kwid has the potential to clock up over 10,000 units each month so long as the after sales and service support infrastructure is in place. The performance of the Kwid in India will also be an acid test for Renault in deciding the future course of action for the car.

Positive market response could see it head out to Brazil and South Africa where India will then end up being a critical global hub. It is likely that other countries in Latin America will be added to the kitty since customer tastes are pretty much on a par with those in India.

For the second half of 2015, Renault believes the European automotive market will “remain buoyant and continue to offset the decline” in its major emerging countries. “The global automotive market should record growth of one per cent versus the previously projected two per cent due in particular to the slowdown in the Chinese market and the crisis in Latin America and in Russia,” it has stated.

The silver lining in the cloud would be the promise from recent launches like the Espace and Kadjar “which were very well received” and of Lodgy and Kwid in India. “The strengthening of our positions in Europe, combined with the many products launched in 2015, confirms our ability to speed up growth in the second half of the year," added Stoll.

Published on January 24, 2018

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