Renault banks on localised sourcing to roll out new cars

Renault Kwid: Stronger heart

  Banking on leveraging its localised material sourcing model to roll out new cars, French automotive company Renault is planning to roll out at least one new model every year starting 2017.

This year, however, the company's primary focus was on the hatchback Kwid, which got a one liter capacity engine variant and the Duster which was also launched in the automatic variant. However, in the forthcoming festive season, it plans to launch an automatic variant of Kwid as well.

“We want to leverage 98 per cent of localisation of materials and will launch one car every year 2017 onwards,” country chief executive officer and managing director of Renault India, Summit Shawnee told Business Standard.

According to Shawnee, launch of the new models can vary ranging from the already global products or developed in India which can cater to global needs. However, the company is keen to use localised sourcing of raw materials to roll out new models.

It has recently ramped up production capacity in its Chennai plant to produce 4, 80,000 units. Renault India shares the same manufacturing facility with Nissan as well.

The company has placed emphasis on having a strong local presence and local content and has design centers in Mumbai and Chennai, logistics centres in Pune and Chennai besides regional offices in Chennai, Mumbai, Delhi, and Kolkata.

Increased sales, however, may not reflect in a higher market share as the official reasoned that the market volume is also growing.

According to data from SIAM, a total of 2,04,69,385 units were sold in the 2015-16 fiscal period as against 1,97,24,371 units reflecting an increase of 3.78 per cent.

Renault India is currently exporting Kwid — its bestseller to Sri Lanka, Nepal and Mauritius and plans to soon export the same to Bhutan and Bangladesh in the coming months and South Africa at a later date. Besides, it will also start local production of the car model in Brazil.

The company, during January-August this year, has sold 86,835 units in India as compared to 26,559 units in the corresponding period last year, thereby registering a growth of 227 per cent.

Kwid, which claims a market share of around 14.2 per cent in the segment and competes with cars like Alto, Eon, Wagon R, i10 and others comprised 75 per cent of the company’s sales.

“This year, we had planned to double our unit sales as compared to 2015,” he said. The company had sold 50,000 units in the last calendar year.

Renault India, which now commands a 4.5 per cent market share after its entry into India in 2012 is aggressively expanding its dealer network to push sales. Currently, it has 205 outlets which it plans to scale up to 270 this year. Most of these outlets will be opened in tier 2-3 cities where the company sees potential sales.

Sawhney claimed that Renault is the sixth largest selling car brand in India.

“My primary target is to first lay down the foundation for a strong business network post which market share will be the focus,” the official said.

The French automotive company is also focussing on building its used car sales network fast and is focussing on Bengaluru, Nagpur, Chandigarh and Jaipur besides other cities. By December this year, it plans to come up with 20 such showrooms which will be expanded to 50 in the coming year.

"Estimates suggest that the pre-owned car market is nearly 3 times the size of new car volumes in Western Europe, UK and US. In India, the used car market is already more than the new car volume and it is estimated to reach twice the size of the new car market within the next 5 years," Sawhney said adding that Renault Selection will be playing a crucial role in establishing the Renault brand in India.

In August this year, Renault registered its highest ever monthly sales of 12,972 units as against 1,527 units in the corresponding month last year.