'Low-cost car of the future must involve India'

In a rare occurrence, some battle-hardened hacks today allowed themselves to ask for Carlos Ghosn's autograph.

Ghosn, the chief executive of France's second-largest carmaker Renault, is a global auto industry legend for reviving Nissan Motor of Japan, in which Renault is the single largest shareholder.

He spoke in his usual candid manner after the inauguration of Mahindra & Mahindra's Nashik factory that will roll out Renault's Logan sedans. Excerpts:

The Indian agenda: We have come here to understand frugal product engineering and marketing. You have to learn it from someone who practises it as a way of living.

The mindset behind the Scorpio (Mahindra & Mahindra's successful utility vehicle) "� an example of frugal engineering "� is what we want to learn.

The Indian partner can help us get a sense of definition of the product. The Bajaj three-wheeler is an amazing product and the company enjoys a 35 per cent margin on it.

We need to know how to assemble and source such products and make money out of them. Indian manufacturers know it best.

China is also a low-cost manufacturer. But there is something unique about India's frugality of engineering and management. If I have to fight the battle on low cost, I am going to do it (with a base) in India.

It will be difficult to develop a low-cost car of the future without involving India.

The benchmark of low-cost manufacturing: If you want to be serious in India, you must not cross $3,000 in product cost.

Ratan Tata's Rs 1 lakh car: It is a very interesting project. We will be watching it closely.

The road ahead for Logan: We have made three commitments to India. The Logan should be among the top three in quality. Secondly, Renault's target is to sell 3.3 million cars in 2009, which is 800,000 more than what we sold in 2005. Of that, 50,000 will come from India. But there is potential for more.

The sales threshold at which the Logan will break even: The breakeven level is 30,000-32,000. I will give the Nobel prize to the management if it can make profits between May (when the cars begin to get dispatched) and December this year. But I am optimistic about next January to January 2009.

The alliance with Mahindra & Mahindra: Renault has made a clear choice to ally with Mahindra, which is taking the lead in marketing and sales.

They know the Indian market better than us. Nissan (which is part of a three-way joint venture for a manufacturing plant in Chennai) has not yet decided.

It will probably take on an Indian partner, which should be some other company to ensure against confusion and cannibalisation.

For the foreseeable future, Renault will partner with Mahindra. But it is like marriage. Can you say that you will be a couple forever?

The way ahead for the Chennai plant: Apart from the manufacturing joint venture, Renault will most likely tie up with Mahindra for marketing the products from the Chennai plant, where we will produce Logan and its derivates to begin with.

However, the Indian market is changing. Today, our product is focused on the A, B and C segments, which comprise 80 per cent of the market. Tomorrow, it can be something else.