The Light Is Green: India auto industry update (Part 6): Renault-Nissan in India

As a provider of dealer management systems to automobile dealerships in several emerging markets, we closely follow what happens in the auto industry in key regions around the world. I thought it might be interesting to share some of that information.

In the world's major markets, auto sales are slowing at the same time that competition increases, so global auto manufacturers are setting their sights on big emerging markets like the BRIC countries: China, Russia, Brazil and India.

This series briefly discusses the promising future of the automotive industry in India. We've already looked at what GM, VW, Honda, and Ford are doing in India. Now let's take a look at partners Nissan and Renault.

Nissan and French carmaker Renault form a very tight alliance, though they are not actually merged. Renault owns a 44.4% stake in Nissan, while Nissan owns 15% of Renault. Nissan is the world's ninth largest car maker, Renault the tenth, in terms of unit sales. Together they own a 9.6% global market share.

The two companies are autonomous units, and achieve savings through jointly owned distribution subsidiaries in a range of European countries, as well as by reducing the number of suppliers that deliver parts to both firms. If you're interested in the alliance, read more at the BBC.

Nissan in India

Nissan logo Japanese carmaker Nissan has a subsidiary in India: Nissan India.

Nissan currently offers two models in India, the X-Trail compact SUV and the Teana sedan. But, like all of the other major manufacturers, Nissan and Renault have their sights set on launching a low cost car specifically designed for the Indian market.

Nissan's low cost car for India

Project 1: Nissan and Suzuki (scratched)

In September 2006, Nissan and Suzuki announced plans to jointly set up a car plant in India to produce a low-cost vehicle. But just two months later Nissan backed out and instead joined forces with its parent Renault, who had a plan to work with their existing partner, Indian manufacturer Mahindra & Mahindra. (Nissan will, however, continue its arrangement to source a compact car from Suzuki's Indian arm Maruti Udyog, but for Europe.)

Project 2: Nissan, Renault, and Mahindra (ongoing, maybeabout to be scratched?)

The idea is to build a $3,000 car in a joint venture with Mahindra and Mahindra, a local maker of tractors and utility vehicles.

The $3,000 target has become a sort of holy grail for all of the majors. Indian manufacturer Tata Motors threw down the gauntlet last year when they announced plans for a $2,300 "People's Car" to be launched in 2008. Tata's will be the world's cheapest car.

The current price leader is the Maruti 800, at $4,500. Maruti is controlled by Japan's Suzuki Motor, and owns a whopping 50% of the Indian car market.

Carlos Ghosn, CEO of Renault-Nissan, says that Nissan's upcoming low-cost car will not compete directly with Renault's Logan.

"One car manufacturer says it is to bring a $3,000 car to India next year and it is a challenge we take seriously. We will be ready when the car comes to the market, we will have enough information, research, discussion. Our obvious partner is Mahindra and we are working with them, but we have not finalized any agreement yet," said Ghosn.

The idea of the super cheap car is to lure buyers from among India's 45 million drivers of scooters and motorcycles.

Of Nissan's awaited entry into the ultra low-cost segment, the Bangkok Times says "... this cost-effective car is under study for Thailand, Russia, China, India, South America and the Middle East."

Project 3: Renault and Bajaj Auto (maybe)

Some speculation triggered by comments from an alert reader.

Forbes reports that Nissan and sister company Renault may have a Plan B for the $3,000 car if, as they mention, Mahindra says they are not interested in the $3000 car (they seem to want to position themselves globally as a SUV manufacturer).

So Renault will now talk with Bajaj Auto Ltd., a local manufacturer of motorcycles and Vespa-style scooters. But neither side is saying much.

Renault in India Renault logo

Renault and local tractor and auto manufacturer Mahindra & Mahindra created a joint venture, Mahindra Renault, in 2005, to manufacture and sell Renault's Logan car in India. Mahindra owns 51% of this 125 million euro project, Renault the remaining share.

Mahindra Renault has a plant in the city of Nashik that can produce 50,000 vehicles a year. This is where the Logan is now being built. The Logan costs between $9,700 (gasoline version) and $12,400 (diesel) in India.

The Logan is sold in India through Mahindra's existing dealer network.

Renault Logan Mahindra Renault and Nissan are now investing $900 million to build a facility in Chennai, in southern India. The plant will be ready in 2009 and will have an output of 400,000 cars, among them the Logan. (Logans are also assembled in Russia, Iran, Colombia, Brazil and Morocco.)

Mahindra will own 50% of the new plant, Renault and Nissan 25% each.

Posts in this series:

Tags: India, auto industry, automotive industry, India auto industry, Nissan India, Renault India, Renault Logan, Logan, Mahindra & Mahindra, Mahindra Renault, Bajaj Auto, Bajaj

Powered by Qumana

Comments

Renault Logans initially went solely under the name of Dacia Logan, Dacia being a romanian car maker recently bought by Renault. So that make has been built in Romania for a few years now and that's where it all started.

Posted by: Razvan | December 11, 2007 at 11:11 AM

Nice read ....

Isn't Renault now looking at doing a JV with Bajaj?

Regards,
Madhu
www.meracarforum.com

Posted by: Madhu Nair | July 15, 2007 at 07:08 PM