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Renault revs up on two engines

Among the late entrants to the Indian auto market, Renault is betting on two brands, Kwid and Duster to gain time and speed over its rivals. While Kwid with 10 per cent market share is currently a distant second to Maruti's Alto (40 per cent) in its category, Duster is among the top five compact SUVs today, the company says. It has 4 per cent of the market while Hyundai's Creta is the bestselling brand in this category. Its two-brand strategy, Renault believes, will help cross a lakh units in domestic sales by 2016 and take its overall market share in 2017 to five from the current 4.5 per cent (Society for Indian Automobiles, SIAM).

All forthcoming models will be variants of either Kwid or Duster, says the company. However, this strategy flies against regular industry practice. Most auto companies rely on a portfolio of brands across age and income categories to establish their credentials in the country. But Sumit Sawhney, CEO and managing director, Renault India believes that the two-brand focus has worked for the company. He says that Renault's rise should count among the swiftest by an auto company in India. It is the seventh largest auto maker in the country today within five years of its entry. Most companies, ranked from one to six have been in the country for 15-20 years and those between the ranks eight and 14, more than 10 years.

Sawhney says, "We are a young brand, but we are moving very very fast." Critics however are sceptical and say, relying on just Kwid and Duster is a risk.

Raising the dust
Duster is central to the company's strategy, the four-year old compact SUV identified closely with Renault in India. Sawhney adds that brand's image is extremely important, especially in the entry level segment. Duster has a 'luxury' image, he says.

Duster has also played a big role in Kwid's success. Sawhney recalls his interaction with few of the customers in tier-II towns who referred to Kwid as 'Baby Duster' or, as a car from the 'Duster Company' and so on.

While Duster clocks around 2,500 units a month, Kwid is selling around 7,000 a month. Kwid is the second largest selling car in the mini hatchback segment for the last two months after Maruti Alto. The sub Rs 7-8 lakh segment in India, the company believes will see phenomenal growth and it expects India to soon be third largest passenger car market in the world. The demand for Kwid is a reflection of this potential.

The waiting time for Kwid today is around three to four months. So far 20,000 units have been shipped out and Renault is planning to ramp up production at Oragadam near Chennai from 6,000 a month to 8,000 units by end of February and 10,000 units by March. This will be the fastest ramp up for Renault. By June or July, Renault hopes to clear at least 35-40 per cent of the bookings backlog. "I don't expect 100 per cent of the people who booked will wait for the product, we will see some cancellations," says Sawhney.

Renault revs up on two engines Extending the brand
Renault plans to ease out old Duster models by next month. The new version includes a few new features but, has the same design platform as its predecessor. Two variants of Kwid, a one litre Kwid and Kwid AMT are also on the cards.

It will be bringing in more models as its CMF (common module family), the platform it uses, allows the company to create at least five bodies. Nissan, Renault's alliance partner shares the same production facility and platform and is also planning to roll out its new Datsun RediGo soon but the two cannot be compared says Sawhney.

The auto industry grew at 8.5 per cent last year but, Renault's growth was around 20 per cent Sawhney says. One of the reasons for swift growth the company believes is that they were able to position Kwid in a manner that it became the preferred brand for first-time buyers.

They could do that partly because they got the pricing strategy (sub Rs 4 lakh) right and also because having launched with Duster, they were able to establish themselves as a trusted brand. Many had tried and failed, except Maruti and Hyundai and people were skeptical. But Duster helped address this challenge believes Sawhney.

Interestingly Duster has emerged a metro brand while Kwid is a hit in small towns. Many have bought into the small car as an aspirational purchase too, linking its positioning to the more expensive urban Duster. Kwid is also being shown as a 'make-in-india' success story. Localisation is around 98 per cent says the company, which is now planning to increase Duster's localisation to 80 from 70 per cent.

The company is also focusing on service, besides traditional centres it has launched mobile workshops. "This is not just a mobile service van, which has basic tools and all. This (Lodgy car) is a workshop on the wheels and it is the first of its kind in India," says Sawhney. These mobile workshops offer doorstep service and can handle around 5-6 cars a day. Renault also plans to expand its distribution network to over 240 by end of 2016 from the current 205.