France’s second-largest car maker Renault is ready to make an aggressive solo entry with seven or eight new models, ranging from a 1.1 litre hatcback to a luxury sedan.
The French major will officially announce its solo India plans on Tuesday.
The move comes after Renault's troubled five-year partnership with Mahindra & Mahindra (M&M) failed to provide the French company with a platform to become a serious player in the country. The joint venture, in which Renault owns 49 per cent, has been able to sell only 7,000 cars annually of just one model, the Logan.
Renault and Japanese car maker Nissan — which share a common global CEO in Carlos Ghosn — have also tied up with Bajaj Auto to work on a low-cost car (in which Bajaj will hold 50 per cent, and Nissan and Renault the rest). This project has been delayed by over a year with the new deadline fixed for 2012.
Renault's small car is expected to compete against the Hyundai i10, a version of its luxury car Fluence which will take on Honda Civic and the Skoda Octavia, a model of the Koleos, a sports utility vehicle, will compete with the Honda CRV, and a version of the Kangoo, a utility vehicle, that could lock horns with Maruti's low-priced Eeco.
At least two or three of these cars are expected to be launched in the next 12 months.
The new models, will be produced by Renault Nissan India Ltd at the Chennai facility, owned in equal proportions by the two companies. The two car makers, which have cross holdings in each other companies globally, will only share the manufacturing facility but make and sell their own cars.
M&M had expressed dissatisfaction over investing in a new vehicle manufacturing plant in Chennai (along with Renault and Nissan) and had opted to move out of the tripartite joint venture in January 2008.
This renewed approach by Renault towards India marks a turnaround by the French giant from last year's decision of putting its India plans on hold indefinitely, after it suffered a $3.8 billion loss in the first half of 2009.
Although the Logan is currently being sold through dealerships appointed by Mahindra Renault Private Limited (MRPL), these new models from the French company will be sold through a new set of dealers chosen by Renault India.
The Chennai facility will be made operational before May this year when Nissan will also launch its newly developed compact car from the facility. The platform of this model will be used by Renault to make its own compact car as well as a mid-sized segment sedan. Both companies are also checking the feasibility of setting up an engine facility.
The Chennai facility, which has a peak capacity of 400,000 units a year, will witness a combined investment of about Rs 4,500 crore from both partners. So far Renault has invested about Euro 100 million (Rs 650 crore) into the new plant.
The Logan facility based in Nashik is currently operating at just 10 to 12 per cent of its peak capacity of 50,000 units a year. Mounting losses and reduced demand for the car forced both Indo-French company to reconsider the partnership.
Although plans of having a shorter Logan to take advantage of the lower excise duty on hatchbacks was being worked out, nothing concrete has taken place. Sources say M&M has developed a shorter version of the model which falls just below the mandatory four meter length, allowing it to qualify for the eight per cent excise duty against 20 per cent levied on bigger cars.