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Renault-Nissan, a global alliance between France’s Renault SA and Japan’s Nissan Motor Co Ltd, is planning to expand the capacity of its Oragadam's plant near here to 500,000 units a year from the current 400,000 units as it eyes an ambitious 15 per cent market share in India.
Nissan will set up a new manufacturing line, which will eventually take the plant capacity to 600,000 units per annum, said Toru Hasegawa, corporate vice-president (Africa, West Asia and India), Nissan.
The expansion plan was announced close on the heels of Nissan unveiling a new model under its revived Datsun brand, aimed at targeting first-timers keen to get on the car-owning ladder. On Monday, the Japanese car maker unveiled the five-door hatchback, Datsun Go, which will be manufactured at the Oragadam facility.
The Franco-Japanese alliance aims to capture five per cent market share in India by the end of the current year, and has set a 15 per cent share, going forward. It has also announced that it would double investments in India to $5 billion (Rs 29,640 crore today).
Nissan is targeting a 10 per cent market share by 2016 from three per cent now with 50 per cent of the sales coming from the Datsun line. The Japanese auto maker says localisation level will increase from 88 per cent in 2012 to 97 per cent in 2014 and will become 100 per cent by the target year. Apart from passenger cars, the Oragadam facility also manufactures light commercial vehicles for the Ashok Leyland-Nissan joint venture. “We have additional land at the existing facility to add another production line, which can add 200,000 more units per annum," said Hasegawa.
The expansion plan comes at a time when car makers in India are facing a tough time amid economic slowdown. Sales of passenger cars fell 10 per cent in the April-June quarter from the previous year, according to the Society of Indian Automobile Manufacturers.
Lot to learn from India: CEO
India is not only a market, but also an important partner and a place to learn many things from, said Carlos Ghosn, chief executive officer (CEO) of Renault-Nissan global alliance, pointing to the significance of Asia’s third largest economy to the Franco-Japanese auto alliance.
India will be one of the top five countries globally for France’s Renault SA, while for Nissan Motor Co Ltd, it can be among top 10 markets, added the the 59-year old CEO.
Asked whether Renault and Nissan compete with each other in India, Ghosn said there was a huge opportunity and competition for both companies outside the alliance and both of them “need to achieve our goal of five per cent market share by the end of this year and 15 per cent, going forward”.
Hasegawa, however, remains optimistic about the Indian market. “India remains high among the high growth markets for us and can also be a testing ground before we introduce products in Indonesia, Brazil, Africa among emerging markets," he said.
The contribution from high growth markets, including India, will touch 60 per cent of overall sales by 2016 against 40 per cent now for the alliance, Hasegawa said. Nissan has exported 270,000 units of Micra and Sunny since those were launched, thereby becoming the second largest exporter of cars after Hyundai Motor.
To tap the domestic market, Nissan is planning to increase its dealer network to 300 by 2016 from 145 now.
“As the CEO of Nissan, I am happy that Renault is doing well and as the CEO of Renault, I am happy that Nissan is doing well,” he added.
Why India?
Ghosn believes if a product is successful in India, it can be successful in high growth markets and that is why the company frequently reviews its sales, brand and market share in the country.
Take, for instance, the technology centre at Chennai, which is working at a new platform called common module family (CMF-A), which will first be tested in India and then exported to other high growth markets. It will be an entry pricing level car, which is expected to hit Indian roads in 2015, he added.
As a market, India is one of the lowest penetrated ones 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.
“I am very optimistic. Government investment in infrastructure, enterprises are booming. There are about 200 million middle class people,” Ghosn added.
Asked about Nissan’s partnership strategy in India, the CEO said India was a complex country and it would take for a foreign company to understand the Indian dynamics and the market. “In order to help us, we need partners, who help us to understand the overall market. So, we partnered with Mahindra (Renault), Alliance (Bajaj), and Ashok Leyland.”
The alliance had earlier announced to manufacture and ultra low-cost car with Bajaj. The joint venture with Ashok Leyland, which brought out light commercial vehicle Dost, has been successful. “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,” Ghosn added.
Global auto sales are undergoing lot of pressure because of the economic slowdown. “We are adapting ourselves to this situation. In the last six-seven years, the market is going down and going back to the 1992 level,” said Ghosn. He noted that 10 years ago, Europe used to contribute 30 per cent of the global car sales and now, its share is only 15 per cent.
For Renault, 45 per cent of the sales were from Eurpe. So, pressure and challenge are very high and other high growth markets need to be tapped, for which India will play a key role.
Renault has set a target to double its sales to 70,000 units in India this year, while Nissan is more bullish at about 100,000
