 "India not only a market, but also a partner & place to learn: Carlos Ghosn")
He went on saying it might be a polite approach, but we are serious about it.
Ghosn believes for French major Renault, India will be one of the top five countries globally and for Japan auto major Nissan, India can be top 10 globally. Relatively India is more important for Renualt than for Nissan, because of the foot print of each company and it doesn't mean India is not important for Nissan.
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Asked whether Renault and Nissan competes with each other in India, he says their is a huge opportunity and competition for both the companies outside the Alliance and both the team need to achieve our goal of 5% market share end of this year and 15% going forward.
“As CEO of Nissan I am happy that Renault is doing well and as a CEO of Renault I am happy Nissan is doing well,” he said.
Why India?
“India is not only a market, but also a partner for us and we got lot of things to learn,” said Ghosn, who believes if a product is successful in India, then it can be successful in high growth markets and that is why the company frequently not only review its sales, brand and market share in India but also review its position of new platforms.
Take for instance, the technology centre at Chennai working at a new platform called CMF-A (common module family), which will be first tested India and then it will be exported to high growth markets. The product targeted at young first time buyers, with whom the Alliance want to grow.
First product is expected to hit the Indian roads in 2015. “The product is not localised, but it is local, if it is success in India it will go everywhere,” said Ghosn.
It will be an entry pricing level car, but not an entry level car, he added.
As a market India is one of the lowest with 15 cars for 1,000 residents, compared to 60 in China, 200 in Brazil, 280 in Russia, 450 in Portugal and 800 in the US.
“Ii am very optimistic, Government investing in infrastructure, enterprises are booming, there are about 200 million middle class and going to increase no way anybody can bearish in the industry dont need to sophisticated to need to bring car for Indian people, they are smart demand lot of value thats we test in India.
To double investment
So far invested $2.5 billion invested by the Alliance and plans are to double it in the next five years, said Ghosn.
The partners have invested around $1 billion to set up a plant at Oragadam, near Chennai, which can produce 4,00,000 cars a year. The other investments include setting up a technology centre which will design cars for both Indian and other markets.
On partnerships in India
India is a complex country, whoever comes to India should be modest and need to take time to understand the Indian dynamics and the market.
“In order to help us, we need partners, who help us to overall market, in specific segments and can share something, so we partnered with Mahaindra (Renault), Alliance (Bajaj), Nissan (Ashok Leyland)”.
“Not all of the partnerships were productive, but lots of informations and knowledge were exchanged,” he said.
Some achievements were made with Mahindra, but unfortunately at a point Renault has to say that this is not the way future for us and need to do something else. Mahindra and Renault are doing well on their own”.
Wth Bajaj the Alliance tried to put together Ultra low cost car, now Bajaj is coming with quadricycle, which is great for them.
The JVs with Ashok Leyland have been successful, by bringing the LCV product Dost and it has been a big commercial success, marketing and sales success in India there may be other products coming like this.
“We have our own approach and partnerships. Both are best solutions and you can expect us to continue to work with many people in India and it will be a win-win approach,” said Ghosn.
Growth markets & India way forward...
Some of the high growth markets are going through correction and lots of speculation. Take for instance Europe is going to be tough and has been tough will continue till 2014, recovery wont happen before 2015 post which it will be a moderate growth.
“We are adopting to this situation, in the last 6-7 years in a row the market is going down and going back to 1992 level,” Ghosn, who noted 10 years ago Europe used to contribute 30% of the Global car sales and now its only 15%.
For Renault 45% of the sales was from Eurpe, so pressure and challenge are very high and high growth markets need to be tapped, for which India will play a key role.
Today business in India small, because volume is less. This year Renault set a target to double its sales to 70,000 units in India, while Nissan is more bullish at about 1,00,000 units.
Potential is big and we are creating a base thats going to be substantial for the Alliance. India is a proving ground for products going to Indonesia, South and Central America, Africa and other Asian countries.
Fundamentals are strong in high growth markets and one cannot look at for three months results, one should look at the fundamentals, investment in infrastructure, Government emphasis, private enterprise, outside investment coming in and others. “Overall I am very optimistic about the high growth markets time to time we need to adopt the situation and correct our strategy,” said Ghosn.
Learning from India?
Frugal planning or engineering, India is second to none, said Ghosn, who recalled how Dost was born after a casual discussion with Hinduja Group.
“One day when I was visiting their (Ashok Leyland) factory, I asked them how much it cost for transformation and they gave me a number which was may be just 5% of what we usually invest in transformation I was shocked i asked him are you sure?.”
This triggered interest and we started working on Dost, said Ghosn, who says frugal planning or engineering, India is second to none.