Chennai: Carlos Ghosn, chief executive of Renault-Nissan, spoke in an interview about the company’s plans in India. Edited excerpts:
You have finally started a plant in Chennai to show for all the efforts you put into India.
Yes, that is correct. India is a very sophisticated market, particularly for car manufacturers who have been exposed to many markets in the world. We recognized instantly the fact that India needs a lot of patience, lot of analysis, a lot of learning, accepting from time to time that you got to make one step back in order to make three steps forward.
Planning big: Renault-Nissan chief executive Carlos Ghosn. Prashanth Vishwanathan/Bloomberg
But now we think after these years, and with the arrival (of) this plant, that we have a very strong product plan. We have products which are going to be localized, which means very competitive, and we are going to be using our network in India not only to compete in the Indian market but also to use India as an export base for Europe, Middle East and Africa.
Will you substantially ramp up capacity in India?
The first step is, you have seen it today with the Chennai plant, which is 400,000 capacity. But obviously, if we go to six million cars (projected Indian auto market in 10 years) and we want 10% of this market, it means more capacity to come in the future.
What are your plans in India?
I think the first step is to have a successful launch of this plant with the first three cars (models) that we will be launching for the next two years, (then) try to build our marketing and sales network, try to establish the name of the brand. (I) feel our brand, it’s not very well known—both from the Nissan side and from the Renault side, so there are some basic work to be done for the next three years.
But I want to tell you that we didn’t come to India to be a niche player; we want to be a global car manufacturer being able to offer cars from A to C segments and moving up.
Could you please explain the logic?
It depends on what you are looking for. We are not looking for a partner who is expert in doing cars because we have this expertise. We have all the technology. We have all the know-how, we have all the processes. We had experimented them practically all over the world. We are present both in developed and developing countries. We have massive presence in China. A lot of the benchmark for the plan here in Chennai has been taken from (the) plant in China.
What we are looking for are people who understand and are capable to help us build a very frugal product and define a very frugal product based on their knowledge of the Indian market.
And secondly, being able to establish and be a very frugal engineering, a very frugal manufacturing.
Why? Because we lost this frugality. When you have engineers coming from Japan, who are coming from France, frugality is not part of the mindset, while the frugality of the engineers in India is something which is obvious.
What is frugality? You do the product with the basic specification that are needed, nothing more. You do it with basic investments needed, nothing more. You do it with the basic processes, nothing more.
This frugality is something very important. It is important to be successful in India but important also to be embedded into our own processes. This frugality is important for India but it is also important for many other emerging markets in the world because what can be successful in India, there is no reason that it is not going to be successful in Russia or in some countries in South America.
This frugal way of doing things—how to define a product of a very low cost—is very basic, is basic functionalities in order to be able to compete in India but also to be able to reproduce something not identical but similar in other emerging markets.