Renault-Nissan to invest $2.5 billion in India over five years

By Anupama Chandrasekaran

CHENNAI, India (Reuters) - Renault SA and Nissan Motor Co Ltd will jointly invest $2.5 billion in India over the next five years, CEO Carlos Ghosn said, as the companies seek to grab a greater share of the market by launching new models.

The Franco-Japanese alliance joins global carmakers including Honda Motor Co which are pouring billions into factories, product development and marketing in the country despite slowing auto sales.

The Renault-Nissan tie-up has already made investments worth $2.5 billion in India, including on a technology centre and on the development of a cheap car platform, Ghosn said. "I think you can count that the 2.5 will double in the next five years."

 

Renault-Nissan is targeting a combined market share of 5 percent in India this year, rising to 15 percent in a few years, Ghosn added, compared with a little more than 3 percent in the fiscal year that ended in March.

Car sales in India have suffered over the last year, falling for an eighth month in June as demand suffers due to rising ownership costs and sluggish economic growth. But car makers are continuing with planned launches so as not to miss out on what some experts expect to be the world's third-biggest car market by 2020.

Renault-Nissan is also preparing to launch low-cost cars on a jointly developed platform in 2015 aimed at emerging markets such as India.

Carmakers across the globe are accelerating the formation of alliances to save on costs through economies of scale by pooling investments and purchases.

Separately, Christian Mardrus, alliance managing director for logistics, said the two companies expect to achieve joint savings of 3.5 billion euros in 2015 as they pool more of their operations.

Renault and Nissan had previously set a joint savings goal of 4 billion euros in 2016.

"We have more and more convergence in our products. In 2015 when we launch the first low-cost car, we will definitely do more than 3 billion euros in cost savings," Mardrus said during a visit by senior Renault-Nissan executives to Chennai, where the alliance has a manufacturing plant.

Nissan had on Monday said it would manufacture cars from its revived Datsun brand at the Chennai plant, and sell them for less than 400,000 rupee each in India from next year.

(Writing by Aradhana Aravindan; Editing by Miral Fahmy and David Holmes)