The Chennai plant of Renault-Nissan will have lots of spare capacity as French car major Renault has decided to temporarily freeze product plans from there but its partner Nissan will however go ahead with the planned roll-out of its cars.
The 400,000-unit manufacturing facility at Chennai was designed to equally support the business venture of the two companies in India after its third partner (but biggest stake holder) Mahindra & Mahindra walked out in early 2008.
According to a source, Nissan Motor Company will commence production in Chennai according to the earlier plan next year, with the first car due to roll out by the mid-2010.
Both the companies have jointly invested Rs 800 crore in the project so far from the total targeted investment of Rs 4,500 crore.
However, due to a severe crunch in finances that Nissan is facing globally, the ramp-up in production in Chennai will be slow. Among other models, the company will produce the compact and fuel-efficient car known as Micra from Chennai.
The Micra, which is currently on sale in markets like the UK, will be redesigned for India and will fight for space against other compact cars of Maruti Suzuki and Hyundai Motor India.
Nissan is already present in India through models including the X-Trail (sports utility vehicle) and Teana (premium sedan). Both models are priced at a premium as they are imported into the country, attracting huge import duties.
Meanwhile, product plans of Renault from Chennai, which included four new platforms on which a number of models could have been built and two semi knocked-down operations, have been shelved by the company at the moment due to lack of adequate funding.
Renaut has taken a cautious approach towards setting up of any new production facilities worldwide. The Carlos Ghosn-led Renault, which was in urgent need of fresh funding, has promised the local French government that there will be no job losses at least in France.
Last week, the company was granted a loan of Euro 3 billion from the Nicolas Sarkozy-led French government with the initial interest rate fixed at 6 per cent per annum. However this rate will go up when the performance of the company improves.
However, both the companies regard the Indian market as a strategic market for the future and a complete pull-out by both companies was not on their horizon in the near term, said a company executive from Renault.
Even though vehicle platforms will be shared between Renault and Nissan, both companies will have independent production lines at the factory.
