 "It's important for a global manufacturer to have a clear India strategy: Sumit Sawhney")
The Indian customer is demanding, looking for the greatest and the latest product but at very low value, Sumit Sawhney tells Ritwik Sharma
As a late entrant in the Indian automotive market, what have been the key learnings for Renault India with respect to consumers and their buying behaviour?
One of the key learnings for us is that even though India is a big market and it will be among the top three markets in the world by 2020, it is a very specific market that has got very specific needs. So, in India for any product or for any brand what is important is to get five things right. The first is you should have a right product, which is relevant for the market in terms of design, technology or innovation. The second is to have a product with the right features, which meets customer expectations, because we are a country which is very different in terms of demographic. More than 65 per cent of the people are below 25 years of age. Then, the third is right value. Value for me is at what price I am buying, and what is the mileage I would be getting out of the car, third part is what is going to be the maintenance cost. The fourth "right" is the right time. Timing in a sense means you have to have your dealer at work ready, trainings ready, people ready and that's very important in terms of the preparation for the market. The fifth is right strategy. If I have to give you an example, Kwid at the time of its launch had 98 per cent localisation, and it was launched with a lot of innovation in marketing and having a right strategy in place in terms of segmentation.
One of the challenges is that the Indian customer is a very demanding customer, looking for the greatest and the latest product but he is willing to take that at very low value, so he wants it to be very competitively priced. So, that is a clear challenge for any manufacturer. One has to work very strongly to meet that challenge. If I have to talk from an automotive point of view, then it's very important for any manufacturer to have a clear India strategy, because it's very tough to superimpose any other country, market or product strategy on India.
Renault India has achieved a high percentage of localisation a lot quicker in comparison to established players. What are the advantages derived from it?
The advantage of localisation is that all your suppliers are based in India. If you have your local supplier you will ensure that you give the product at the right cost, because you have localised your product and are not exposed to any forex risk. If you are importing you are exposed to forex risk and to import duty. The second benefit of localisation is that you are able to bring your cost down and are able to give the right value on the cost of ownership or the maintenance cost of spare parts. If I have to give Kwid as an example, it had a great price. Also, great fuel efficiency. Just because we had localised highly we were able to reduce the cost of maintenance. And our cost of maintenance at the time of launch was 17 per cent lower than market leaders. Also, if you have to do any kind of innovation in any of the part, product or design then it is very easy to do it because your suppliers are based in India.
Renault India has been slow in launching new products. Is that a deliberate strategy? What are its pros and cons and does it work in a country like India?
We are over four years old in this country. You have to set your basics right. So our first basic was we had the right sized plant, technology and design centres in India. We are building the right foundation. Then, you have to build the right dealer network. At the time of Kwid's launch, we had 205 dealerships, which was the fastest by any manufacturer. It is very easy to launch products in India, but it is very important that you are launching products that are relevant to India. At Renault, we want to make sure that we have this clear strategy and step-by-step approach, by which we keep on laying a sound foundation to build a runway for the future. In 2014 I made an announcement, which was my mid-term plan, where I said by 2017 we will be No. 1 European manufacturer in the country and we will also have five per cent market share. Today, we already have 4.4 per cent market share. We are already the No. 1 European brand. We should achieve our goal of five per cent market share this year.
So, how do you react to other competing companies with a wider product portfolio?
We are just a four-year-old company. We have just got one strong entry in the sub-4 metre category. But India is an important market, so we will keep on building our portfolio, we will be launching at least one new product every year. But you have to make sure you launch the right product and it has enough depth in terms of volumes. Otherwise, launching too many products is not a recipe for success.
In terms of marketing and sales strategies, how much do you rely on digital channels for a higher share of mind, if not the market?
Digital is one of the key pillars of marketing. As I said earlier, India is a country with over 65 per cent people aged below 25 and it has one of the highest mobile phone connections, it is one of the fastest growing smartphone markets, so people are very well-connected and that is why digital plays an important role. With Kwid, we didn't have our car at the dealership at the launch, we launched it digitally. We were the first manufacturer in India to launch an app. The virtual showroom was another digital innovation, besides other initiatives. So, yes, digital is important but you have to complement it with other on-ground and above-the-line efforts.
As a late entrant in the Indian automotive market, what have been the key learnings for Renault India with respect to consumers and their buying behaviour?
One of the key learnings for us is that even though India is a big market and it will be among the top three markets in the world by 2020, it is a very specific market that has got very specific needs. So, in India for any product or for any brand what is important is to get five things right. The first is you should have a right product, which is relevant for the market in terms of design, technology or innovation. The second is to have a product with the right features, which meets customer expectations, because we are a country which is very different in terms of demographic. More than 65 per cent of the people are below 25 years of age. Then, the third is right value. Value for me is at what price I am buying, and what is the mileage I would be getting out of the car, third part is what is going to be the maintenance cost. The fourth "right" is the right time. Timing in a sense means you have to have your dealer at work ready, trainings ready, people ready and that's very important in terms of the preparation for the market. The fifth is right strategy. If I have to give you an example, Kwid at the time of its launch had 98 per cent localisation, and it was launched with a lot of innovation in marketing and having a right strategy in place in terms of segmentation.
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Any challenges you faced in India that you didn't foresee or prepare to handle?
One of the challenges is that the Indian customer is a very demanding customer, looking for the greatest and the latest product but he is willing to take that at very low value, so he wants it to be very competitively priced. So, that is a clear challenge for any manufacturer. One has to work very strongly to meet that challenge. If I have to talk from an automotive point of view, then it's very important for any manufacturer to have a clear India strategy, because it's very tough to superimpose any other country, market or product strategy on India.
Renault India has achieved a high percentage of localisation a lot quicker in comparison to established players. What are the advantages derived from it?
The advantage of localisation is that all your suppliers are based in India. If you have your local supplier you will ensure that you give the product at the right cost, because you have localised your product and are not exposed to any forex risk. If you are importing you are exposed to forex risk and to import duty. The second benefit of localisation is that you are able to bring your cost down and are able to give the right value on the cost of ownership or the maintenance cost of spare parts. If I have to give Kwid as an example, it had a great price. Also, great fuel efficiency. Just because we had localised highly we were able to reduce the cost of maintenance. And our cost of maintenance at the time of launch was 17 per cent lower than market leaders. Also, if you have to do any kind of innovation in any of the part, product or design then it is very easy to do it because your suppliers are based in India.
Renault India has been slow in launching new products. Is that a deliberate strategy? What are its pros and cons and does it work in a country like India?
We are over four years old in this country. You have to set your basics right. So our first basic was we had the right sized plant, technology and design centres in India. We are building the right foundation. Then, you have to build the right dealer network. At the time of Kwid's launch, we had 205 dealerships, which was the fastest by any manufacturer. It is very easy to launch products in India, but it is very important that you are launching products that are relevant to India. At Renault, we want to make sure that we have this clear strategy and step-by-step approach, by which we keep on laying a sound foundation to build a runway for the future. In 2014 I made an announcement, which was my mid-term plan, where I said by 2017 we will be No. 1 European manufacturer in the country and we will also have five per cent market share. Today, we already have 4.4 per cent market share. We are already the No. 1 European brand. We should achieve our goal of five per cent market share this year.
So, how do you react to other competing companies with a wider product portfolio?
We are just a four-year-old company. We have just got one strong entry in the sub-4 metre category. But India is an important market, so we will keep on building our portfolio, we will be launching at least one new product every year. But you have to make sure you launch the right product and it has enough depth in terms of volumes. Otherwise, launching too many products is not a recipe for success.
In terms of marketing and sales strategies, how much do you rely on digital channels for a higher share of mind, if not the market?
Digital is one of the key pillars of marketing. As I said earlier, India is a country with over 65 per cent people aged below 25 and it has one of the highest mobile phone connections, it is one of the fastest growing smartphone markets, so people are very well-connected and that is why digital plays an important role. With Kwid, we didn't have our car at the dealership at the launch, we launched it digitally. We were the first manufacturer in India to launch an app. The virtual showroom was another digital innovation, besides other initiatives. So, yes, digital is important but you have to complement it with other on-ground and above-the-line efforts.