Close on the heels of Renault-Mahindra launch of the
Logan, the Renault-Nissan combine is working on an all-new
low-cost car for the Indian market.
The two will partner an Indian company, Renault CEO
Carlos Ghosn, who's also the CEO of Nissan, in which
Renault owns a 44 per cent stake, told journalists after
inaugurating the assembly line for Logan.
"We are looking for another low-cost car like Logan,
and it would be difficult to build a successful low-cost
car without an association with an Indian company. We
can gain a lot from their skills in frugal product planning
and frugal engineering," he said. ''The objective
is how do we make a low-cost car, and still make a profit,''
Renault-Nissan could tie up with Mahindra & Mahindra
itself or other automobile companies like the Tata Motors
or Bajaj Auto, Ghosn said. "We want to bring frugal
and to achieve your goal, you need to have
partners who are best-in-class (in costs).
"It's possible we could work with Mahindra on a
low-cost car. We will always talk to Mahindra on options,"
Ghosn said sourcing components from India would be significant,
as costs here were about 30 per cent lower than in Europe
Ghosn reiterated Renault had not made a decision yet
on using Nissan's plants in Pakistan and Indonesia,
and that it was "very probable" it would use
the Nissan plant in South Africa.
A new low-cost small car should not cost over $2,500-$3,000
for a market like India, and such a car would be best
engineered from scratch in India than bringing it from
Europe and trying to adapt it to local conditionsit,
The Chennai plant, which will make 4 lakh cars a year
in a three-way joint venture between Mahindra, Renault
and Nissan, will start with two small car platforms
and initially just export these cars, said Ghosn.
This $900 million plant, which will be up by 2009, will
also produce the variants of Logan. But Renault's two
joint ventures in India could chart their own course
in the market. ''The two companies will have independent
marketing and channel strategy. It's better to keep
them separate to avoid confusion,'' said Ghosn.
The new plant for Logan in Nashik (a new body shop and
assembly line), in which Mahindra Renault is investing
$700 million, is likely to break even in its second
year of operations. "I am told we will break even
at 30,000-32,000 cars. 2007 could be a profitable year,"
Ghosn said he was optimistic that the French carmaker's
joint venture with India's Mahindra and Mahindra would
be profitable in 2008.
"Not right away, but we are optimistic that the
venture will be profitable in 2008 (calendar year),"
Renault's Logan sedan, which marks its first foray into
the fast-growing Indian market, is being produced at
a Mahindra plant in Nashik, which can roll out 12 vehicles
Ghosn said he estimated the venture could break even
with sales of 30,000-32,000 cars.
The Logan is also being made in Iran, Romania, Russia,
Morocco and Colombia, but India is the first in which
the right-hand drive version is being produced.
The car will also be made in Brazil.
"India is a key market for Renault both in the
case of Renault Commitment
2009 -- which has set a target of 800,000 additional
new cars sold worldwide by 2009 -- and beyond that,"
Ghosn said, adding " India is going to be a very
big market for us beyond 2009."