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Renault will stay with at least one Indian partner

Renault will stay with at least one Indian partner
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First Published: Wed, Oct 21 2009. 09 14 PM IST

Strategic market: Renault chief executive Carlos Ghosn says the French firm will continue to work with all its three Indian partners for now. Kimimasa Mayama / Bloomberg
Strategic market: Renault chief executive Carlos Ghosn says the French firm will continue to work with all its three Indian partners for now. Kimimasa Mayama / Bloomberg
Updated: Wed, Oct 21 2009. 09 14 PM IST
Tokyo: In an interview at the Tokyo Motor Show, French car maker Renault SA’s chief executive officer Carlos Ghosn spoke about the firm’s many alliances in India and the status of each of them. Earlier this month, Renault denied a report that it was looking to replace Mahindra and Mahindra Ltd in its Logan joint venture. Renault also has a tie-up with Bajaj Auto Ltd and one with Ashok Leyland Ltd, through Nissan Motor Co., in light commercial vehicles. Renault needs at least one partner in India, said Ghosn. Edited excerpts:
You have unveiled electric vehicles here. Do you see potential for a market in India for these vehicles knowing that the infrastructure is still not ready for such products?
Strategic market: Renault chief executive Carlos Ghosn says the French firm will continue to work with all its three Indian partners for now. Kimimasa Mayama / Bloomberg
I think India will probably come at a later stage. First, as you know, there is a problem of infrastructure, and infrastructure is very important (for electric vehicles). Secondly, if you really want to make the electric car popular, you have to address the bulk of the market. The bulk of the market in India is probably (for) a lower-cost product that you need to adapt (to). For example, the Leaf will address the heart of the market in the US, the heart of the market in Western Europe and the heart of the market in Japan. It will not address the heart of the market in India... For India, you are going to need a product which is much more affordable than the one that we are showing.
So you still see that they are about a couple of years away or maybe more?
No doubt.
Talking about your alliance with Mahindra and Mahindra in India, there has been some speculation going on about some strain in the partnership and that the MoU (memorandum of understanding) that comes up for renewal in 2010 may not get renewed. Can you just clarify and give your comments?
Every time you have a partnership, you always have rumours from time to time based on the discussions taking place in a partnership. Yes, we will continue to work with Mahindra and Mahindra; yes, we will continue to work with Bajaj; we will continue to work with Ashok Leyland—we are working with many people in India. From time to time, we will have problems because you don’t see the situation the same way. From time to time, we will accept the Indian partner and, from time to time, we have the impression that the partner is going in the wrong direction.
But this is our way of learning the Indian market. But what I can tell you is that we will certainly stay with at least one of them. We may, over the long run, sever our relationship with one of them or strengthen with another one.
I cannot tell you what is going to happen. But we need at least one partner in India because there are certain things that only an Indian company can do for us.
Your sedan project with Mahindra and Mahindra, the Logan, has not been doing very well. The sales have been faltering for many months now. What are you doing about that? Is that not a matter of concern for you?
It is a matter of concern every time your sales go down on any one, not only in India. So we always check why. But, obviously, one of the reasons...is (that) the Logan is more expensive than we hoped it would be in India and, as you know, the Indian market is extremely sensitive to price.
One of the reasons, it is a little bit expensive is because you don’t have enough volume of sales and you don’t have enough localization in India. So we will learn from it and we are going to come with the second wave of products.
So we are not just going to India by saying I am going to try this product and if it doesn’t work I am going out. No. This is the long-term strategy. This for us is a strategic market. We are going to try first time and, the second time, we will go with a different car, and, eventually, with a different partner. It doesn’t matter. But we are in India to stay.
So you could go with a different partner for the sedan?
We have three partners today. So we want to develop as much as possible with three partners, as much as possible.
With Bajaj you only have the ultra-low-cost car project...
For the moment, yes. But it can evolve into something different. We are business people. Where we see opportunity, we go.
cnbctv18@livemint.com
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First Published: Wed, Oct 21 2009. 09 14 PM IST